Borneo Resource to acquire gold property in Sulawesi
Saturday, February 9 2013 - 02:50 AM WIB
Borneo Resource Investments Ltd said that it has entered into a formal agreement to acquire 100% ownership in a 50 hectare of gold property in the North Minahasa Regency of North Sulawesi Province.
The agreement entails Borneo acquiring 100% of the shares of a locally incorporated company, PT Puncak Kalabat, which owns the property.
The company said that Borneo has made an initial deposit to secure the acquisition of Puncak, with further scheduled payments totaling $5 million to be made by the end of 2013 to complete the acquisition of the property.
Nils Ollquist CEO of Borneo commented, "We are fortunate to enjoy excellent relationships with key players in the gold industry in Manado and, it is fair to say that our local partner, the principal of Puncak, is one of the leading independent operators in the region. Given the apparent quality and size of the gold reef, management believes, although there can be no assurance, it may be able to upgrade production from current levels to approximately 3kg (106oz) per day with a relatively modest capital investment of less than $250,000. Given fixed labor costs of approximately 30% of revenues, favorable mining conditions and stable prices for gold, this could result in a net profit to Borneo of approximately $2.5 million per month."
Ollquist concluded, "During our discussions with Puncak we were introduced to other small scale operators in the area. We have begun discussions with these operators regarding the prospect of centralizing gold sales through Borneo to enhance pricing strategy. It is believed that up to 10kg (353oz) per day could be consolidated through this trading operation with both pricing benefits and trading profits available accordingly."
According to the current owner, small scale mining operations have been conducted on the western side of the property for around 2 years and have produced, to date, over 700kg (25,000oz) of gold with a purity level of around 70%.
Although the Company has not determined the amount of gold reserves on the property, mining reports currently reflect that daily production is approximately 1.5kg (53oz) per day, with a value, at current market rates of around $60,000 or over $1.8 million per month.
Editing by Adianto P. Simamora