Danusa begins due diligence of Trenggalek gold project
Thursday, October 29 2015 - 01:59 AM WIB
ASX-listed Arc Exploration Ltd said that Indonesia?s PT Danusa Tambang Nusantara has started due diligence of the Trenggalek Gold-Copper Project in East Java.
?Due diligence by PT Danusa is on-going and expected to be completed by the end of November,? Arc said in a statement Thursday.
Arc signed a Non-Binding Memorandum of Understanding (MoU) with PT Danusa late last month to explore Trenggalek. Danusa is a subsidiary of one of the largest contract miners in Indonesia.
Pursuant to the MoU, Danusa has an exclusive right to conduct due diligence for a period of 2 months. Subject to satisfactory due diligence, the parties have agreed to an indicative investment structure that would provide Danusa with the opportunity to earn up to US$ 10 million within four years including an up-front cash payment to Arc.
The progressive earn in process contemplates a minimum expenditure of US$ 1 million every 6-8 months with agreed milestones.
If Danusa moved over time to 80 percent, Arc would retain a 15 per 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.
Whilst recognizing the porphyry gold-copper potential of the Trenggalek Project, Danusa advises 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.
Exploration expenditure at Trenggalek for the quarter totaled US$49,390, Arc said.
Editing by Reiner Simanjuntak