The Jakarta Post
After beginning the development of its first mining area in Banyuwangi regency, East Java, in June 2015, publicly listed miner PT Merdeka Copper Gold (Merdeka) expects to commence operations by the end of the year.
The development of the Tujuh Bukit mining area has reached around 30 percent to 40 percent so far and is set to be completed by December.
From June to December, Merdeka will focus on building access for mine transportation, plants to collect and process ore and gold, as well as a construction area for heap leaching.
The company has built supporting facilities including a 7-kilometer access road for cars, fuel storage, a clean water processing facility, a maintenance workshop for heavy equipment, main office and medical clinic. In addition, it has obtained a mining operation permit (IUP) from the local administration.
The firm’s director Hardi Wijaya Liong said the project would be able to produce around 90,000 ounces of gold and 300,000 ounces of silver per annum. It aims to generate revenue of US$90 million to $95 million in 2017.
“We estimate that the production volume of gold and silver will suffice until 2025,” he added.
Established in 2012, Merdeka, which went public in June last year, is currently 25.7-percent owned by investment firm PT Saratoga Investama Sedaya and 32.8 percent by PT Provident Capital, while local tycoon and businessman Garibaldi Thohir owns 10.6 percent of shares.
The miner is a parent company for PT Bumi Suksesindo, which is responsible for Tujuh Bukit’s operation and production, while another subsidiary, PT Damai Suksesindo, is in charge of exploration.
It also owns PT Cinta Bumi Suksesindo (CBS) and PT Beta Bumi Suksesindo (BBS), which will control Merdeka’s next mineral business.
With an investment of $126.9 million, the company financed Tujuh Bukit’s development through an initial public offering 12 months ago, as well as syndicated loans from BNP Paribas, Hongkong and Shanghai Banking Corporation and Societe Generale Asia Limited.
One of the world’s top undeveloped gold and copper sites, Tujuh Bukit is estimated to contain 19 billion pounds of copper, 74 million ounces of silver and 28 million ounces of gold, according to data from the Joint Ore Reserves Committee (JORC).
Indonesia possesses world-class mineral deposits and a long history of successful hard rock mining across the volcanic arcs that place it on the Pacific Ring of Fire. Important mineral deposits include tin, bauxite, iron ore, laterite nickel, copper, gold and silver.
According to data from the US Geological Survey, Indonesia’s annual production of 75 tons of gold in 2015 accounted for 2.5 percent of the worldwide production of 3,000 tons, placing the country as the 12th most dominant gold producer.
China took the top spot with yearly production of 490 tons — 16.5 percent of global output — followed by Australia and Russia with annual production of 300 tons and 242 tons, respectively.
However, as global gold production continues to rise, investment in developing ore bodies has slowed on the back of weaker price trends since 2012 and a contraction of mining production in 2015. The worldwide fall in gold prices led to industry-wide cost cutting among gold mining companies to remain profitable.
“That is why we implemented the heap leaching technology, a proven low-cost method. It positions our company to compete very effectively on a cash cost per ton basis,” Merdeka’s president director Adi Adriansyah Sjoekri said, revealing that with the technology, the firm’s production cost for gold could be as low as $500 per ounce. (adt/dmr)
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