The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region
Issue link: https://asiaminer.epubxp.com/i/632337
Volume 13 • Issue 1 | 2016 | ASIA Miner | 17 Indonesia G-RESOURCES is selling its 95% stake in the Martabe Gold-Silver Project in North Sumatra for total consideration of US$775 million. The buyer is a consortium led by private equity frm EMR Capital, which has paid a US$35 million deposit. With gold and silver prices having slumped since the Martabe mine started producing in 2012, G-Resources decided to seek buyers with the intention of using the proceeds to expand into lending, securities brokerage and property investment primarily in Hong Kong. The consortium announced its intention to purchase Martabe in No- vember with the deposit paid on December 3 into an escrow account, in accordance with the terms of the Sale and Purchase Agreement and the Deposit Agreement. The consortium is led by Melbourne-based EMR Capital and com- prises Farallon Capital and two Indonesian investors - entities owned by Martua Sitorus, who is deputy chairman of agribusiness group Wil- mar International, and the families of Robert and Michael Hartono. EMR holds 61.4% of the consortium, Farallon 20.6%, Martua Sitorus 11% and the Hartono families 7%. The sale includes assumed debt along with a further $130 million if gold prices average $1500 an ounce over a continuous 12-month period before January 2019. EMR's chairman is Owen Hegarty, who is also vice-chairman of G-Resources. He was offcially excluded from the transaction and was not party to any discussions. Owen Hegarty has a long history with the mine. He tried to purchase it from Australian miner OZ Minerals after his company Oxiana Re- sources merged with another company to form OZ Minerals. OZ sold the mine to G-Resources' predecessor in 2009, which then hired him. The provincial government owns the remaining 5%. EMR Capital's chief executive Jason Chang said the frm had long considered Martabe as a possible investment owing to its strong per- formance and growth potential, as well as EMR being a strong believer in gold. He said it would be the sixth investment for the private equity frm's fund, adding to copper and potash assets. The deal propels EMR, which was founded by Jason Chang and Owen Hegarty, into being one of the region's biggest resources private equity groups. G-Resources' Indonesian subsidiary PT Agincourt Resources, which operates Martabe, will start expanding mining operations to include the nearby Barani Pit as well as the current Purnama Pit. Martabe pro- duced 156,316 gold ounces and 1.29 million silver ounces in the frst half of 2015, surpassing half its year-end targets of 285,000 ounces and 2.3 million ounces respectively. BARISAN Gold has entered into a preliminary agreement with a prominent Indonesian group to jointly advance Barisan's Indonesian properties. Under the terms of the agreement, the Indonesian group will take an 80% equity interest in both of Barisan's Indonesian sub- sidiaries. Barisan's remaining 20% equity interest will be fully carried by the new partner until the issuance of a mining licence at the company's project(s) in Indonesia. It will become the Indonesian group's sole responsibility to carry out exploration, feasibility study activities and permitting required pri- or to the issuance of a mining licence. Upon receiving the licence, Barisan will have the option to fund its 20% share or be further diluted to 5%, in which case its 5% interest will become free carried. The new partner is a well-established Indonesian conglomerate with operations in real estate and agriculture amongst others. They are fully-fnanced and have a strong team on hand that will combine with Barisan's Indonesian staff to carry the projects through the next phase of permitting, exploration and feasibility studies. The new partner has already advanced signifcant capital to Bari- san's Indonesian subsidiaries in order for them to carry-on permit- ting activities ahead of restarting operations. "It is with great excitement that we announce this partnership," said Barisan Gold's CEO Alex Granger. "This deal secures Barisan a direct path to production at its world-class Indonesian projects. "In the current climate, owning a signifcant equity interest in a world-class mining project whereby you do not have to contribute anything fnancially is of great value. That, combined with attracting a strong local partner which removes any risks associated with op- erating in a challenging country, is of equal importance. "Barisan Gold has been canvasing the market for almost 12 months seeking fnancial solutions for advancement of its high-qual- ity Indonesian assets. Of all the alternatives identifed during this process, we believe this transaction represents the best value for shareholders. It represents a signifcant premium to the implied val- ue of the Indonesian assets as refected in the current share price of Barisan Gold." In order to fund its share of expenses prior to closing the trans- action, Barisan has raised C$500,000 in a non-brokered private placement. "Certain directors and offcers purchased a signifcant portion of the placement, which is likely to be the fnal opportunity for investors to participate in a placement ahead of the issuance of mining licences some years down the road." Barisan secures Indonesian partner An aerial view of the Martabe Gold-Silver Project in North Sumatra. Photo courtesy G-Resources. G-Resources sells Martabe project