G-Resources divests 5% stake to local governments

Hong Kong-listed gold producer G-Resources Group Ltd. has agreed to divest 5 percent of its shares in PT Agincourt Resources to the local governments of North Sumatra Province and South Tapanuli regency, The Jakarta Post reported.

The agreement was signed on Thursday as Agincourt announced the start of commercial production of gold and silver after 15 years of exploration at its Martabe mine in Batang Toru district.

?The Martabe mine is in the final stages of commissioning and we are now moving from a construction phase into a full operation. This is the start of a new journey for the company and for the people of Batang Toru and South Tapanuli,? said G-Resources President Director Peter Geoffrey Albert.

Albert said the 5 percent share divestment in Agincourt to the regional governments was a ?great example of a win-win outcome? to ensure that the benefits of the company?s operations would be shared with key stakeholders.

Based on a memorandum of understanding (M0U) signed by G-Resources and the regional governments in June2008, the 5 percent shares would be given to the provincial and South Tapanuli regency governments which would receive 30 percent and 70 percent respectively.

The MoU further stipulates that the payment for the divestment would be derived from annual dividends paid to the new shareholders. Approximately 50 percent of the annual dividends for the regional government would be allocated as payment for the share divestment.

The company has so far spent nearly US$750 million to finance exploration in Martabe and expects the 163,927-hectare mine to produce 250,000 ounces ? equivalent to around 7 tons ? of gold per year and 2-3 million ounces of silver per year.(*)