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ublicly listed miner Merdeka Copper Gold is seeking US$120 million in syndicated loans to finance the development of its East Java asset, said to be the one of the largest ore deposits in the country.

Corporate secretary Ellie Turjandi said on Monday that Merdeka Copper Gold '€” a unit of investment firm Saratoga Group '€” was seeking to sign a loan agreement in January with a number of foreign banks to help finance construction and development of its Tujuh Bukit mining concession in Banyuwangi.

The loans, Ellie said, would amount to $120 million, adding that there would also be a provisional $10 million loan in case the company needed more cash. Merdeka is offering its whole stake in a subsidiary as collateral for the loans.

'€œThe tenor will be five years and the interest rate will be favorable,'€ she told reporters. '€œIt will involve syndicated loans comprising three to five foreign lenders.'€

Merdeka Copper Gold had secured approval from an extraordinary shareholders meeting to put up its entire stake in Bumi Suksesindo (BSI), the Merdeka subsidiary that operates the Banyuwangi concession, as collateral for the loans, she said. The collateral will also include BSI'€™s stake in three subsidiaries.

Merdeka holds a 99.88 percent stake in BSI, whose assets stood at $145.93 million as of June, according to the miner'€™s first-half financial report.

Ellie said that the company needed a total of $126.5 million to finance the development of Tujuh Bukit, which is said to have the second-largest reserves in the country after Freeport Indonesia'€™s site in Papua, before it started its initial production in the fourth quarter of 2016.

The site, according to a 2012 Joint Ore Reserves Committee Report (JORC) report, has 90 million tons of ore in its oxide layer. The company expects to generate 90,000 troy ounces of gold and 300,000 oz of silver annually up to 2025 once production begins.

Merdeka Copper Gold was the first miner still in the exploration stage to be listed on the Indonesia Stock Exchange (IDX) after a regulation allowing mining firms that have yet to start production to enter the bourse was introduced in November last year.

The company generated Rp 819.04 billion (US$62.1 million) in fresh funds from floating 21.7 percent of its enlarged capital on the market in June, after going with an upper level for its IPO price range at Rp 2,000 a piece. Half of the proceeds will go directly to BSI to develop the sites, while the remaining 40 percent will be used to pay debts and 10 percent will be used as working capital.

As of the end of September, the company had used 53 percent of the funds, mostly for refinancing, according to an official written statement.

As its asset has not entered production stage, Merdeka is yet to book any revenue in its financial statement, recording $2.98 million net losses in the first half, double the $1.45 million net loss it booked in the same period last year.

In its first full-year of operation in 2017, Merdeka hoped to generate around $140 million of turnover, Ellie said.

The company will send its production to state-run diversified miner Aneka Tambang'€™s (Antam) refinery.

Merdeka'€™s head of legal affairs. Muhammad Baskoro. said that for the time being, the firm'€™s business plan was to market its production abroad, especially to China.