Nusantara ramps up development of Awak Mas Gold Project

By Justin Ware. Published at Dec 12, 2018, in Mining

On the heels of its recently completed definitive feasibility study (DFS), ASX junior Nusantara (ASX:NUS) has clinched another key milestone, securing a strategic Indonesian cornerstone investor with funds raised to help advance the Awak Mas Gold Project.

That investor is PT Indika Energy Tbk (IDX:INDY), a leading integrated energy and resources company listed on the Indonesian Stock Exchange, with strategic investments in energy resources, services and infrastructure.

Indika and Nusantara have entered into agreements defining an ongoing strategic relationship, which will focus on exploring avenues for completing the financing and development of the Awak Mas Gold Project, as well as making provisions for Indika to acquire an interest in the project (extent and nature of the interest to be agreed).

On completion of a A$10.25 million capital raising, Indika (via its wholly owned subsidiary PT Indika Minerals Investindo) will obtain a 19.9% interest in Nusantara and its existing shareholder, AustralianSuper Pty Ltd, will raise its stake to 14%.

The funds raised will help advance NUS's Awak Project, with the follow key terms, as laid out below:

  • NUS has entered into a subscription agreement for a placement of 30.6 million shares at 23 cents per share, for total funds A$$7.04 million with a subsidiary of Indika. Indika will obtain a 19.9% interest as a result.
  • Existing shareholder AustralianSuper has subscribed for 11.2 million shares at 23 cents per share. This placement will raise A$2.6 million and is subject to shareholder approval. AustralianSuper’s holding will rise to 14%.
  • Subject to shareholder approval, Indika will subscribe for a further 2.8 million shares at 23 cents per share totalling $0.64 million.
  • NUS’ major shareholder, Lion Selection Group (ASX:LSX), which holds 32.32%, supports both placements.
  • Indika and AustralianSuper will be issued options on a 1 for 2 pro-rata to their share subscriptions, these options will be exercisable at A$0.35 on or before November 2020.
  • In total, these placements will raise A$10.25 million, which will advance the development of the Awak Mas Gold Project through further optimisation studies, near-mine exploration, prep work and general working capital.

NUS managing director, Mike Spreadborough, commented on this latest development: “The board of Nusuntara welcomes Indika as a shareholder and looks forward to the contribution it will make to exploring avenues for the financing and development of the Awak Mas Gold Project.

“Indika’s investment in Nusantara is a significant milestone in progressing the project and demonstrates the value of this low cost, long life gold project and its exceptional exploration potential.

“Indika brings a wealth of Indonesian operation experience through its extensive resource and energy activities across Indonesia, and we look forward to the ongoing support and advice of Indika’s highly credentialed Board of Commissioners and Board of Directors.

“I’d also like to thank AustralianSuper for its ongoing support, which further validates the significant potential of Awak Mas.”

More about Indika

Indika's energy resources business pillar focuses on exploration, production and processing of coal.

Its energy services business, on the other hand, provides contract mining, engineering, procurement and construction as well as operations and maintenance.

On top of that, the energy infrastructure component of the business specialises in coal-fired power plants and provides marine transportation, logistics for bulk goods and natural resources.

Indika managing director and CEO, Azis Armand, commented: “We are excited to be part of Nusantara Resources and as a local partner, we look forward to working together with management to unlock the potential of the Awak Mas Gold Project.”

Some background on the Awak Mas Gold Project

Nusantara's Awak Mas Gold Project is located in South Sulawesi, Indonesia, with all approvals in place for development.

Awak Mas is one of just a few undeveloped gold projects within the Asia-Pacific region, and has an ore Reserve of 1.1 million ounces, within a 2.0 million-ounce Mineral Resource.

The recently completed DFS confirms that the project is technically feasible and financially robust, with significant opportunities to increase project value through optimising the current mineral resources and through further exploration.

The DFS supports an initial eleven-year project with the 2.5 Mtpa processing plant targeting annual gold production of around 100,000 ounces, delivering strong margins.

The mining operation will include two open pit mines with an initial 11-year life, and a low project strip ratio of 3.5.

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