H

ong Kong-listed G-Resources has agreed to sell its main asset, the Martabe gold mine in North Sumatra, for US$775 million, including assumed debt, to a consortium led by a private equity firm headed by its vice chairman.

With gold prices having slumped by about a third since the Martabe mine started producing in 2012, G-Resources had put the mine up for sale, looking to use the proceeds to expand into lending, securities brokerage and property investment.

As reported by Reuters in Melbourne on Monday, the company said it would sell the mine to a consortium led by EMR Capital with Farallon Capital and two Indonesian investors, for $775 million, including assumed debt, plus $130 million if gold prices averaged $1,500 an ounce over a continuous 12-month period before January 2019.

Melbourne-based EMR Capital'€™s chairman Owen Hegarty is vice chairman of G-Resources. Both sides said Hegarty was officially excluded from the transaction and was not party to any discussions.

Hegarty has a long history with the mine, which he tried to buy from Australian miner OZ Minerals after his company Oxiana Resources merged with another company to form OZ Minerals.

OZ sold the mine to G-Resources'€™ predecessor instead in 2009, which then hired Hegarty.

EMR Capital chief executive Jason Chang said the firm had long eyed Martabe as a possible investment, which will be the sixth investment for the private equity firm'€™s fund, adding to its copper and potash assets. '€œWe are positive on gold,'€ Chang said.

The Indonesian partners in the investment are entities owned by Martua Sitorus, who is deputy chairman of agribusiness group Wilmar International, and the families of Robert and Michael Hartono.

Following the news, the G-Resources stock jumped the most in almost seven months in Hong Kong, advancing as much as 16 percent to HK$0.205 in Monday trading and was at HK$0.189 at 1:24 p.m. local time, Bloomberg reported.

Separately, PT Agincourt Resources, the subsidiary of G-Resources in charge of the management of the Martabe mine, said they would start expanding its mine field next year to the nearby Barani Pit, injecting $10 million in investment for the new exploitation.

Agincourt Resources president director Timothy John Vincent Duffy admitted that the reserves in the new Barani Pit were not as big as those in the current Purnama Pit.

'€œIt [Barani] has one tenth in mineral reserves compared to Purnama Pit,'€ Duffy told reporters in Medan, North Sumatra late last week.

According to data from the company, the 1.5-kilometer-long Purnama Pit has more than 4.5 million ounces (oz) of gold resources and 2.5 million oz of gold reserves, in addition to 60 million oz of silver resources and 30 million oz of silver reserves.

The company produced 156,316 oz of gold and 1.29 million oz of silver in the January to June period of this year from the Martabe mine, surpassing half of its year-end 285,000 oz gold and 2.3 million oz silver target. In the second quarter alone, the company produced 72,096 oz of gold and 631,189 oz of silver, an increase of 2.79 percent and 18.89 percent respectively compared to the same period last year.

Last year, the company produced 275,515 oz of gold, higher than its forecast production of 250,000 oz, according to its 2014 financial report.

'€” Apriadi Gunawan contributed to the story from Medan