Arc signs MoU with Danusa on Trenggalek gold project
Tuesday, September 29 2015 - 01:02 AM WIB
ASX-listed Arc Exploration Limited (ARX) announced Tuesday that it has signed a non-binding memorandum of understanding (MoU) with Indonesia?s PT Danusa Tambang Nusantara (Danusa) to explore the Trenggalek Gold-Copper Project in Eastern Java. Danusa is a subsidiary of one of the largest contract miners in Indonesia.
The company said in a statement that pursuant to the MoU, Danusa has an exclusive right to conduct due diligence for a period of two months. ?Subject to satisfactory due diligence, the parties have agreed to an indicative investment structure that would provide Danusa with the opportunity to progressively earn up to 80 percent of the project for expenditure of up to US$ 10 million within four years including an up-front cash payment to ARX,? ARX said.
The progressive earn in process contemplates a minimum expenditure of US$ 1 million every 6-8 months with agreed milestones.
ARX further explained that if Danusa moved over time to 80 percent, ARX would retain a 15 percent interest in the Trenggalek Project and also receive a royalty of 0.7 percent of sales revenue on gold production of between 500,000-1,500,000 ounces from epithermal mineralization conditional upon the LME gold price being above US$1,000 per oz.
The proposal is subject to due diligence by Danusa to be completed within the two month exclusivity period, and relevant corporate approvals and legal documentation.
Whilst recognising the porphyry gold-copper potential of the Trenggalek Project identified during the Anglo American Joint Venture, Danusa advised that it intends to initially concentrate its efforts on exploring and evaluating the epithermal gold veins. Particular attention will be at Sentul in the southeast of the license area.
Danusa will also seek to upgrade the current Exploration License into an Exploitation License if a potentially viable gold resource can be demonstrated at Sentul or on any other of the multiple gold prospects identified within the license area.
Editing by Reiner Simanjuntak