State miner PT Aneka Tambang (Antam) has signed an agreement with ANZ Bank and Australian listed gold mining firm Arc Exploration to acquire full ownership of mining company PT Cibaliung Sumber Daya (CSD).
Prior to this transaction, Arc was the majority shareholder of CSD with a 95 percent share, with Antam holding the remaining 5 percent.
Antam corporate secretary Bimo Budi Satriyo said Tuesday that Antam would acquire 100 percent ownership if the deal worth around US$8 million was completed.
"PT CSD has been going through funding difficulties to continue mining activities, and Antam decided to take over the company because of its potential," he said.
According to CSD's December 2008 quarter report, the company halted civil, structural and mechanical installation work in the third quarter of 2008 in order to conserve financial resources. The processing plant is now on limited care and maintenance.
All other project infrastructure works were placed on care and maintenance during the quarter. Some remedial work on the project tailings storage facility was undertaken during the quarter.
Arc was unable to secure a financing partner or find funding for the Cibaliung gold mine, accordingly, in cooperation with ANZ, a sale process was initiated in late 2008.
"CSD has a debt to ANZ which has been funding their activities. We will need to take this matter to the shareholders, because taking over PT CSD would also mean taking over its debts," Bimo said.
According to the Arc quarterly mining report, company expenditure in relation to the Cibaliung gold project totaled A$4.9 million (US$3.3million), in addition to an estimated loan of $65.9 million owed to ANZ Bank as of Dec. 31, last year.
"If the PT CSD takeover goes smoothly, this would boost Antam's performance," he added.
CSD operates the Cibaliung Gold mine at Pandeglang, Banten.
The Cibaliung project has a mine life of six years with annual ore production of 220,000 tons and production of gold equivalent of 2.2 tons per year, with estimated gold reserves of around 12.8 tons.
If the transaction is materialized, Antam could almost double its gold production to five tons per year, from the 2.8 tons production capacity from the existing gold mine in Pongkor gold mine in Bogor.
After the transaction is completed, Antam will fund and manage Cibaliung with immediate effect.
"We targeted the operation of the mine in the second semester of 2010," Bimo added. (fmb)