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Masmindo prepares $166m for gold mine in Sulawesi
Power agreement: Nusantara Resources Limited chairman Martin Pyle (left), managing director Mike Spreadbrough (second left), PLN general manager for South, West and Southeast Sulawesi Bob Saril, PT Masmindo Dwi Area president director Boyke Abidin (second right) and PLN business director for Sulawesi region Syamsul Huda chat after the signing of a memorandum of understanding at the PLN office in Jakarta on Tuesday
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span class="inline inline-center">Power agreement: Nusantara Resources Limited chairman Martin Pyle (left), managing director Mike Spreadbrough (second left), PLN general manager for South, West and Southeast Sulawesi Bob Saril, PT Masmindo Dwi Area president director Boyke Abidin (second right) and PLN business director for Sulawesi region Syamsul Huda chat after the signing of a memorandum of understanding at the PLN office in Jakarta on Tuesday.(JP/Wendra Ajistyatama)
Gold miner PT Masmindo Dwi Area, the local unit of Australia-based Nusantara Resources Limited, has allocated US$166 million to the Awak Mas mining site in Luwu regency, South Sulawesi, over the next few years.
Masmindo secured the contract of work (CoW) to develop an area of 14,390 hectares in 1998. Since 2000, it has spent about $40 million on drilling 1,000 points within a 500-ha plot, where it has found 1.74 million ounces of gold.
Of the latest allocation, the firm has earmarked $16 million for pre-construction work at the mining site that may begin in the second half of this year, while the majority of the remainder will be disbursed on the main construction scheduled to kick off in June next year.
For the main construction, Masmindo will approach local engineering and construction companies to jointly build the mining site as well as lenders to provide financing.
“We hope to pour gold in early 2020 and employ people in the region for an operation with [at least] 10 years of production,” Nusantara Resources managing director Mike Spreadborough said on Tuesday.
Under its current arrangement with the government, Masmindo can generate gold from the site for 30 years starting from the time it is developed.
“With the current resources, we will be able to mine [gold] for 10 years. Therefore, we will continue drilling in other areas to find new resources to allow us extend the lifetime of our production to the maximum period of 30 years,” Masmindo president director Boyke Abidin said.
The miner hopes to generate 100,000 ounces of gold doré bars starting in 2020 and the output will be refined in a smelter owned by state-owned diversified miner PT Aneka Tambang to produce gold of 99.99 percent purity.
Once the construction is complete, Masmindo will need 30 megawatts (MW) of electricity to support its mining operations.
On Tuesday, the firm signed a memorandum of understanding (MoU) with state-owned electricity firm PLN to secure power supply for the former’s operation in the next decades. The electricity will be sold at Rp 997 (7 US cents) per kilowatt hour (kWh).
PLN’s general manager for southeast, southern and western parts of Sulawesi, Bob Saril, said it would be ready to provide the electricity demanded by Masmindo as well as other industrial firms in the region.
“At present, the electricity reserve margin of those regions stands at 240 MW, or 24 percent of the peak demand. This is possible because we have lots of renewable sources, especially hydro,” Bob said.
The electricity reserve margin refers to the difference between capacity and peak demand. The ideal reserve margin of a region stands between 20 and 35 percent, according to the International Energy Agency (IEA).
At present, PLN operates a 126 MW hydro power plant in Sulawesi, while PT Poso Energy, a subsidiary of Kalla Group, operates 3x65 MW hydro facilities.
