Austindo farms out troubled Banten gold project

ASX-listed mining firm Austindo Resources Corporation NL announced Tuesday it has entered into a binding Heads of Agreement (HoA) with East Asia Minerals Corporation (EAS) for a farm-out 71.8 percent interest in Cibaliung Gold Project in Banten province.

Under the HoA, EAS will contribute US$35 million directly into the project and will become the Project manager. In addition, EAS is to assume responsibility for all debt obligations of the project amounted to $15 million.

?The funds contributed by EAS will be applied to advance the project to positive cash flow, estimated to occur in the 2nd half of 2009, and to near mine exploration with the aim of delineating further reserves and resources,? the company said.

Definitive agreement is scheduled to be reached May 28, 2008.

Austindo had been struggling to secure financing for Cibaliung after the underground mine project was hit by series of technical difficulties, including delay in decline development that had caused costs to soar and first gold pour postponed from original schedule of early 2007.

The Cibaliung gold project will produce some 70,000 ounces of gold equivalent annually for 6 years, with mining would be carried out by conventional underground cut and fill stopping with decline access.

Austindo said that following completion of the farm-out agreement, it would focus on exploration of its other epithermal gold-silver tenements in Java and would change its name to Arc Exploration Limited.(denny)