Arc Exploration signs MoU with Danusa to develop Trenggalek gold project

JAKARTA (rambuenergy.com) – Australian miner Arc Exploration Limited (ARX) announced that it has signed a Non-Binding Memorandum of Understanding (MoU) with PT Danusa Tambang Nusantara (Danusa) to explore the Trenggalek Gold-Copper Project in East Java province.

Danusa is a subsidiary of one of the largest contract miners in Indonesia.

Pursuant to the MoU, Danusa has an exclusive right to conduct due diligence for a period of 2 months. Subject to satisfactory due diligence, the parties have agreed to an indicative investment structure that would provide Danusa with the opportunity to progressively earn up to 80 percent of the project for expenditure of up to US$ 10 million within 4 years including an up-front cash payment to ARX.

The progressive earn in process contemplates a minimum expenditure of US$ 1 million every 6-8 months with agreed milestones. If Danusa moved over time to 80%, ARX would retain a 15 percent interest in the Trenggalek Project and also receive a royalty of 0.7 percent of sales revenue on gold production of between 500,000-1,500,000 ounces from epithermal mineralisation conditional upon the LME gold price being above US$1,000 per oz.

The proposal is subject to due diligence by Danusa to be completed within the two month exclusivity period, and relevant corporate approvals and legal documentation.

Whilst recognising the porphyry gold-copper potential of the Trenggalek Project identified during the Anglo American Joint Venture, Danusa advises that it intends to initially concentrate its efforts on exploring and evaluating the epithermal gold veins. Particular attention will be at Sentul in the southeast of the licence area.

Danusa will also seek to upgrade the current Exploration Licence into an Exploitation Licence if a potentially viable gold resource can be demonstrated at Sentul or on any other of the multiple gold prospects identified within the licence area.

Jeff Malaihollo, Managing Director of ARX commented: “We are pleased to be able to attract such a reputable Indonesian Group with an extensive mining experience and financial capability to take the Trenggalek Project forward. The fact that Danusa are considering an investment is a testament to the quality and potential of the Trenggalek Project.”

“The Group has a proven capacity to quickly put mines into production in Indonesia. We believe that this is the best way to add value for ARX shareholders at the earliest opportunity,” he said.

The Southern Mountains of East Java is also host to the large Tumpangpitu porphyry copper-gold deposit located in the Tujuh Bukit district, about 200 kilometers to the east of the Trenggalek project area. Our early investigation of the porphyry potential of the Trenggalek IUP area indicates that it contains similar rocks and geological setting to Tujuh Bukit.

One of the attractions of Trenggalek is that large tracts remain substantially underexplored. We estimate that only 50% of our 30,000 square-kilometre tenement area has been prospected and mapped, leaving substantial potential for new prospects to be identified.

Key Facts

Trenggalek project

Project Name : Trenggalek Project – East Java

Ownership of Arc: 95%

Total area of the Exploration IUP: 300 sqm

Project Description: Trenggalek project is located in the Southern Mountains of East Java Province. Trenggalek is in one of the most promising project areas for potential gold and copper discoveries. The total area of the Exploration IUP tenement is about 300 square-kilometres and covers highly prospective Oligo-Miocene and younger volcanosedimentary rocks in part of the Sunda-Banda Arc. Since 2006, Arc has identified multiple epithermal gold targets and has more recently recognized the potential for large gold-copper porphyry systems. There are several prospects already identified in this large and prospective areas.such as Sentul, Kojan, Buluroto and Sumber Bening. (*)

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