Aussie firm to buy W. Java gold project

Australia-listed firm Augur Resources Ltd announced on Wednesday that its wholly owned unit Augur Investments Pty Limited has entered an agreement with PT BEST Clean Energy to acquire an option to purchase a 90 percent interest in PT Golden Pricindo.

Golden Pricindo holds an IUP (Mining Business Licence) covering the central Jampang area in southwestern Java.

The transaction will result in the issue by Augur Resources of 10 million shares and 5 million options and an upfront payment of US$250,000. After this payment is made, Augur will have a conditional two year option to purchase 90 percent of Golden, the company said.

The option may be exercised by a further payment of $9 million within two years if Augur is satisfied, after conducting due diligence of the technical, legal, financial and tax situation of Golden and its licences. The final payment will be reduced to $8 million in the event that the gold processing plant fails to reach production within two years.

Augur has agreed to provide $1 million in working capital to aid in the refurbishment and operating costs of the gold processing plant. Augur will share half of any profits generated from the sale of gold over the next 2 years in the event that Augur exercises the purchase option or 3 years in the event that Augur doesn?t exercise the purchase option.

The general geology of the area consists of Miocene/Oligocene andesite and dacite rocks overlain by recent volcanic tuffs. Historical mapping and drilling, indicates that gold bearing veins consistent with epithermal or mesothermal style mineralisation exist in the area, it said

Whilst the area covered by the IUP has undergone historical gold mining, limited modem exploration has been conducted with the exception of a three year program undertaken between 1996 and 1999 by Canadian mining company Mispec Resources Inc.

Augur will commence a due diligence review of all the data as well as a drilling program aimed at establishing a JORC compliant resource. Augur has two years to complete its due diligence review of the project licence area.

In addition, Augur Investments Pty Limited has also entered into a profit sharing agreement with Golden to cooperatively manage a small gold processing plant within the Jampang IUP. The agreement allows for small scale processing (up to 100 ton per day) to occur at the site with profit sharing over a period of up to three years. Golden will commence refurbishment of the plant and recommence processing of stockpiled material and shallow oxide material.

The Jampang gold project is located approximately 150 kilometres south of Jakarta. (denny)