Intrepid, Vale sign deal on E. Java copper-gold project

Australian mining firm Intrepid Mines Limited announced on Friday the signing of a Heads of Agreement (HOA) with Vale Exploration Pty Ltd, a wholly-owned subsidiary of Vale S.A, the world?s second largest Mining Company, granting Vale an option to acquire rights to Intrepid?s Tujuh Bukit sulphide copper-gold project in East Java.

Under the terms of the HOA, Vale could earn a 60% shareholding in a joint venture company holding the rights to the Tujuh Bukit project by, amongst other terms, spending a total of US$40 million.

Intrepid and its Indonesian alliance partner, PT Indo Multi Niaga (PT IMN) would retain the remaining 40% interest in the sulphide copper-gold project, and would be free carried by Vale through to completion of a bankable feasibility study.

Intrepid and PT IMN would continue to retain sole rights to the oxide gold-silver deposit which sits above the sulphide copper-gold deposit, it said.

The HOA specifies the general commercial terms that have been agreed between the parties, and is at this time non-binding, with Vale and Intrepid anticipating that the formal, binding documentation will be completed by 30 September 2009.

Preliminary work undertaken by Intrepid at Tujuh Bukit has identified the scope for two distinct projects: (i) an oxide gold-silver project (oxide cap), at which 2.57 million ounces of gold equivalent resources have already been estimated; and (ii) a sulphide copper-gold porphyry and high-sulphidation ore body beneath the ?oxide cap?, which has been intersected by holes GTD 29, 35, 42, 46, and 56.

The oxide gold-silver project is an ideal project for Intrepid to develop with PT IMN, without the need for assistance from a major mining company.

?The Company expects that the successful development of this project will catapult Intrepid into the ranks of the significant mid-tier Australian gold mining companies. The Company believes that the development of the sulphide copper-gold project will take considerably longer and will likely require significant funding before production can be commenced,? it said.

Tujuh Bukit is located in the province of East Java and covers an area of approximately 11,600 hectares, about 205 kilometres southeast of Surabaya, the provincial capital. (alex)