Merdeka, jointly owned by several tycoons such as Edwin Soeryadjaya, Sandiaga Uno and Garibaldi “Boy” Thohir, currently operates the Tujuh Bukit mine in Banyuwangi, East Java, claimed as Indonesia’s second-largest gold and copper mine after Papua’s Grasberg mine.

Tujuh Bukit’s open pits are expected to have annual production rates of 100,000 ounces of gold and 300,000 ounces of silver from 2017 to 2025.

Its underground resources comprise 1.9 billion pounds of mineral containing 0.45 percent copper, 0.45 gram per ton (g/t) gold and 90 g/t molybdenum.

Merdeka, through its subsidiary PT Bumi Suksesindo, has started mining the Tujuh Bukit open pits in December last year. It booked the first sale of 139 kilograms of gold worth US$5 million to Hong Kong-based HSBC Bank in May.

The firm has already signed another deal with the Hong Kong branch of Canadian multinational lender Scotiabank.

It is currently seeking opportunities to sell its gold to Western Australia’s gold and silver coin manufacturer Perth Mint and the Singapore branch of Switzerland-based precious metals refiner Metalor Technologies.

“We will see their offers first before selling our gold to them,” Merdeka Copper Gold corporate secretary Ellie Turjandi said after the company’s annual general shareholders’ meeting on Thursday.

Merdeka has teamed up with state-owned diversified miner PT Aneka Tambang (Antam) to purify its gold ores at the latter’s processing facility, expected to help produce 9,000 ounces of gold a month.

“We expect to get $130 million in revenues this year with the assumption that the price of gold hovers at $1,200 per troy ounce,” Ellie said.

It aims to finally book a profit this year as it had completed the construction of all infrastructure needed for its open pits at the Tujuh Bukit mine at the end of 2016.

Throughout last year, the firm booked $2.75 million in net losses, down 47.15 percent year-on-year.

In 2017, Merdeka hopes it can repay $20 million to $30 million of its syndicated loans worth $130 million coming from three lenders, namely the Singapore branch of France’s BNP Paribas, the Jakarta branch of HSBC and the Hong Kong branch of Société Générale Asia.

Data from the company shows that as of 2016, Merdeka’s total liabilities amounted to $145.12 million, a significant jump from only $18.6 million in the previous year.

Over the next two to three years, it will conduct a pre-feasibility study for the development of the underground resources at the Tujuh Bukit mine.

Merdeka secured a facility agreement worth $25 million from the Singapore-based Pierfront Capital Mezzanine Fund in September 2016, $10 million of which had been allocated for the development of the open pits, while the remaining $15 million would be used to develop the underground mine.

“The management sees that $15 million is not enough to finance the whole development of the underground mine, as it will just be used for the initial studies,” Ellie said. “Hence, we are open for any financing options, whether through a bond issuance or others.”

Merdeka is mulling over the possibility of building its own smelter or teaming up with other downstream players to process its copper produced at Tujuh Bukit mine in the long run.

Such a move is in line with the government’s regulations that only allow miners to export low-grade nickel ore, washed bauxite and copper concentrates if they are committed to develop a new smelter within five years.

“After the pre-feasibility study is done, we will be able to see more clearly where we will go with this underground project,” Merdeka Copper Gold president director Adi Adriansyah Sjoekri said.

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