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MINING | Nusantara Resources
N U S A N TA R A
Awak Mas: Indonesia’s ne
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ext large scale gold mine
MINING | Nusantara Resources
Indonesia’s mining industry has The executive chairman also highlights not always been kind to foreign the vital importance of fostering strong incountry relationships to ensure those positive investors down the years, with a string of high-profile incidents development outcomes he mentions. putting a blot on the sector’s Nusantara has achieved this by employing copybook amongst potential locally across the business and building an investors. However, since the executive team with first-hand experience lifting of a raw ore export ban working in Indonesia. “We are a local in 2016, investor confidence in employer, with local geologists and local the mineral resources sector is people working in the business. Our model, beginning to return. ASX-listed and the Indonesian way of doing business, is to have Indonesians working in the company. Nusantara Resources is one company that is benefiting from improving conditions for foreign “On the corporate side, our director Boyke Abidin has been with this project for over investors in Indonesia, having made rapid progress at its Awak 20 years, so he knows the local community Mas Gold Project on the island of first-hand and has good relations all the way through to government.” Sulawesi since its IPO in August 2017. Delivering the DFS “Indonesia’s mining industry has had an
A little over 12 months after its IPO,
interesting history, and there are many
Nusantara published a definitive feasibility
positive things about operating here,” says
study (DFS) for the Awak Mas project in
Nusantara’s executive chairman Greg Foulis.
October 2018. The company completed over 10,000 metres of drilling ahead of the study
“First and foremost, there is the mineral
in order to prove its new geological model for
endowment in Indonesia from a copper and
the project.
gold perspective. Following that, there have been plenty of recent examples of investors
Awak Mas was first discovered in 1991 but
getting very positive development outcomes
after a series of previous owners failed to
out of Indonesia.”
take the project through to feasibility stage, Nusantara proposed a new geological
Foulis recounts Australian private equity
approach based on an ‘intrusion related’
firm EMR Capital’s US$1.2 billion sale of the
hydrothermal model.
Martabe gold and silver mine last year as a recent example of a foreign investor getting
This different approach to the geology
a strong return in Indonesia.
is what has set Nusantara apart from its
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AMC Consultants (AMC) started working with Nusantara in 2017 and was instrumental in the delivery of a definitive feasibility study that confirmed an asset with a 1.1 million ounce gold ore reserve and an 11-year mine life. AMC is currently working with Nusantara to update the project implementation plan. Under the leadership of David Varcoe, AMC’s team developed a strategy to develop the mine in tropical Sulawesi, overcoming a challenging terrain with a relief of more than 500 metres. Initially, the team completed strategic planning work while the mineral resource was drilled out. Nusantara then engaged AMC to determine the pit shell size, pit design, mine area layout, production schedule, equipment selection and to develop operating and capital costs. AMC worked with the Nusantara team and other consultants to determine the plant throughput and processing methodology to maximise overall project value. In addition, AMC provided guidance to assist with planning the next stages of exploration and reserve development drilling. The mining costs were developed using AMC’s proprietary OPMincost Model.
MINING | Nusantara Resources predecessors and allowed it to progress the project to feasibility stage, according to Foulis. The DFS included a 2 million ounce (Moz) mineral resource with a grade of 1.4 g/t Au, as estimated by Nusantara’s partner Cube Resources. The company also engaged several other well-credentialled consultants
AMC helps Nusantara mine smarter
on the study. “AMC Consultants completed the mine planning, estimated mining costs and the ore reserve, DRA Minnovo helped with metallurgical testwork and an Indonesian company called Resindo worked with us on
AMC worked with Nusantara to develop the Definitive Feasibility Study at Awak Mas. This included mining strategy, costs, & project value maximization.
infrastructure and capital cost estimation. “We have also an opportunity to work with an EPC mining business called PT Petrosea through our partner Indika Energy. We think there is an opportunity to work with them in the construction of this project.” The DFS also outlined sound economics including a post-tax NPV of US$152 million with 20% IRR, based on a conservative gold price of $1,250 per ounce. The study also built in gold price sensitivity where a 10% rise would see the project’s NPV reach $217 million, with an IRR of 26%. Prior to publishing the DFS last year, Nusantara achieved another key objective
amcconsultants.com
when it secured a contract of work agreement with the Government of Indonesia for the Awak Mas project.
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“We have a very good licence situation, we’ve completed the feasibility and brought in a very respectable and significant local partner that is also looking to be diversified in the gold business in Indonesia” Greg Foulis, executive chairman Nusantara Resources
MINING | Nusantara Resources
“Firstly, we confirmed our licence with the
this is not just a business transaction. We
Government of Indonesia and had the
are working very hard on our relationship
five-year period before we move into a
with this partner, to make this a partnership
mandatory sell-down extended to 10 years.
where everybody brings something to the table.
“We have a very good licence situation, we’ve completed the feasibility and brought in a
“Our partner has financial capability and
very respectable and significant local partner
they also have a very good understanding of
that is also looking to be diversified in the
business in Indonesia. We also bring a lot of
gold business in Indonesia.”
technical and gold industry experience to the
Introducing Indika Energy
equation.” Nusantara is aiming to achieve a project level
In December 2018, Nusantara announced
transaction that satisfies both parties and will
that it had formed a strategic partnership
look to be aligned with its partner to ensure
with Indonesian cornerstone investor Indika
both debt and equity capital is secured for
Energy, who will provide a pathway to project
the project, according to Foulis.
level investment in return for a 19.9% interest in Nusantara.
The company has engaged with project finance banks and observed a track record
“We don’t use the word partnership lightly,
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of multinational financiers and international
Firstly, Nusantara will seek to enhance the
banks supporting mining projects in
project through what Foulis calls ‘mine level
Indonesia in recent years, including the large geology’ – wherein the company expects scale Martabe and Tujuh Bukit projects.
positive reconciliation on grade and will test this concept with additional close spaced
In addition, Nusantara received confirmation diamond drilling. from an independent technical expert that there are no fatal flaws in the Awak Mas
“Essentially, in a mining situation we expect
project, further strengthening the case for
to pick up a lot more vertical structure than
international investment.
what we are seeing in the resource model and from the wide spaced drilling. That’s
“We understand our ability to project
what we expect from the mine performance.”
finance and are working through other complimentary options as well as what the
Furthermore, the company recently kicked off
various equity pieces may look like for this
its first ground-based electrical geophysical
project. We are certainly confident that we
programme in the area surrounding Awak
will get this project banked, particularly given Mas. The programme is lighting up some the current $1,400 per ounce gold price.”
The icing on the cake
fantastic structure over an existing satellite deposit along with extensions to that deposit, says Foulis.
While fast-tracking the development of the Awak Mas project towards the construction
“This is all about the icing on the cake.
stage by 2020, an equally large part of
We believe we have an exciting base case
Nusantara’s attention is focused on project
development scenario, but like most gold
enhancement and additional exploration in
operations we have an extremely high
2019.
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expectation of adding a lot of ounces, pre-
pronged approach. We want to get this into
development and or when we move into
production, that’s our number one focus,
production.”
but we also see very significant exploration upside over and beyond our existing
Based on the significant opportunity to
footprint.”
add further resources through project enhancement and satellite exploration,
Overall, Nusantara has developed into a
Nusantara has strong reason to believe
well-credentialled business in Indonesia
it could be sitting on a 5Moz mineralised
with strong community and government
system.
support and a local partner that is providing a pathway to investment for the large scale
“We believe that ultimately there are
Awak Mas project.
a number of intrusives relating to our mineralisation that certainly have the potential to demonstrate that this is part of a larger porphyry-style system. We also have signs of copper mineralisation that we need to follow up. “If you look at the scale and location of our satellite deposits, this is certainly what we call a ‘big system’. We are running a two-
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a j
Published by Anderson Murray Media Ltd
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