West Wits appoints new local partner in Papua gold project

By Romel S. Gurky

ASX-listed West Wits Mining Limited said it has entered into a cooperation framework agreement with logistical services firm PT Intan Angasa Aviation (PTIA) for it to become the company?s new local partner at the Derewo river gold project, in Papua Province.

The agreement is expected to pave the way for the commencement of the project, which has been undermined by illegal mining activities in the region.

?Under this agreement PTIA is to facilitate unfettered access, mining and security to permit the company?s operations at Derewo,? West Wits said in a statement issued on Tuesday.

It added that PTIA is to secure the mine site so as to permit the employees and contractors of the company?s Indonesian subsidiary, PT Madinah Quarrata?ain (PTMQ) to enter, exit and safely control the entire alluvial mining area free from the presence, influence or interference of any unlawful third parties.

?On delivery of that outcome PTIA or its nominee will be entitled to a 50% economic interest in the alluvial project and a 20% shareholding in the operating company. That entitlement corresponds with and will replace existing equity arrangements with the current local partner who is in default of multiple obligations to deliver access to the site,? West Wits said.

All costs incurred through the implementation process are deferred until 30 days after commencement of mining and are then payable by the local operating company. As such returns are subject to the successful operation of the Derewo project. For that reason significant due diligence was undertaken by PTIA to validate the company?s mining plans including the internal mining costs and processing projections prior to entering this agreement.

The company said it commenced the process of seeking a new local partner in response to the continued frustration of its attempts to commence alluvial mining operations at Derewo. Whilst the local regent issued formal orders (June 17, 2014) to the Paniai Police chief (Kapolres) and the Paniai Mines Department to shut down all illegal mining activities within the regency no action has been forthcoming, the company explained.

PTIA is well known to the company as it supplied extensive logistical services and support during the process of construction of infrastructure at Derewo throughout 2012 and 2013.

?Indeed, PTIA?s services were critical in providing independent access to the site which enabled the construction of the airstrip, road and mess. This shared experience allowed us to forge a strong working relationship with PTIA,? West Wits said.

PTIA is affiliated with a wider group that operates businesses across Indonesia ranging from hotels, property, palm oil plantations and some early stage mining. ?It is through this wider group that PTIA holds key relationships which we believe will allow it to procure outcomes for all stakeholders as well as manage the required security on site.?

Editing by Reiner Simanjuntak