Sumatra Copper forms alliance with Merdeka
Monday, September 18 2017 - 02:37 AM WIB
ASX-listed Sumatra Copper & Gold plc announced Monday that it has formed a strategic alliance with IDX-listed gold producer PT Merdeka Copper Gold Tbk, whereby Merdeka will fund ongoing exploration to extend mine life and target production increases.
The company said in a statement that under the alliance, Merdeka will initially invest US$1.5 million over the next six months. The company will in turn issue CDI?s to Merdeka at a price representing the five trading day VWAP prior to the signing of a formal agreement detailing the specifics of the agreed exploration program.
The CDI?s will be issued to Merdeka in tranches based on the exploration spend by Merdeka during each three month period (quarter) and within one month of quarter end, with the first quarter concluding on November 30, 2017.
Sumatra said that ultimately Merdeka intends to invest in stages for up to US$10.0 million under similar terms for each successive approved exploration program, subject to ongoing exploration success and appropriate corporate approvals.
Merdeka is a Jakarta Stock Exchange listed mining company with a market capitalization of approximately US$600 million. Merdeka currently operates the Tujuh Bukit gold-copper mine in East Java, Indonesia and has an experienced executive team headed by Colin Moorhead. Moorhead is a former Director of Exploration at Newcrest in Indonesia, responsible for the multi-million ounce Gosowong mine and Newcrest?s past joint venture with the company at Tandai. Merdeka is expanding its mining footprint in Indonesia and offers a strong balance sheet and technical expertise through Moorhead and his team.
As previously disclosed in the company?s ASX announcement of September 6, 2017, two exploration drill drives will be established at the Belinau underground mine between Levels 11 and 12 (the current base of planned development) to drill for depth extensions to the orebody. Two specialized diamond drill rigs have been ordered for this program, which is anticipated to commence in the December 2017 quarter.
The Company has also signed an agreement with its major shareholders Provident Minerals Pte Ltd and PT Saratoga Investama Sedaya Tbk to accelerate U$S2.0 million of the US$7.5 million major equity raise planned for November 2017 under the amended facility as previously announced to the market on June 27, 2017. The funds will be provided by way of a subordinated loan that will be converted into equity in November 2017.
Sumatra?s Chairman, Jocelyn Waller commented: ?The potential to increase resources and reserves at Tembang has long been recognized, but to date the company?s focus has been on production. With this strategic alliance with Merdeka, the company now has a strong local partner to enable the discovery process to be expedited. It?s a significant and positive development for the company that will add value.?
Editing by Reiner Simanjuntak