Nusantara Resources (ASX:NUS) has achieved a significant improvement in the Indonesia-based Awak Mas Gold Project economic assessment following the release of the updated Mineral Resource estimate in April 2020 and updated Ore Reserve estimate in June 2020.
The economic assessment is based on the October 2018 Definitive Feasibility Study (DFS) amended for the June 2020 mine schedule, updated capital and operating mining cost estimates, updated metallurgical recoveries and reagent use arising from the 2019 phase 2 testwork, and changes to project royalty and the Indonesian company income tax rate.
The new figures, calculated at a US$1,700 per ounce gold price , are:
- NPV5% (post tax ungeared) US$517m +240% +
- IRR (post tax) 45% 120%
- Pay back (post tax) 21 months 27 months faster
Managing Director, Neil Whitaker, said the outstanding economic assessment update provides a compelling case for advancing Awak Mas through the debt process towards construction development early next year.
Nusantara’s strategic partner has rights to acquire up to a 40% interest in Awak Mas on agreed terms. The remaining 60% interest of the above NP post tax ungeared target is US$310 million.
Mr Whitaker said Nusantara is seeking to finance Awak Mas through a combination of project debt, mezzanine finance and equity, including a further investment of US$25 million by PT Indika Energy Tbk in the project vehicle to take its ownership interest to 40%.
Nusantara has engaged Noah’s Rule as specialist debt and hedge adviser to the project vehicle and commenced formal engagement of a debt financing syndicate. Following the updated DFS project economics, Nusantara will engage an independent technical expert report to aid prospective financiers. Discussions continue to advance with these parties for funding the development of Awak Mas, with the improved production profile anticipated to increase the Awak Mas debt capacity, with circa US$140 million now being sought.
Completion of financing will be subject to terms usual for a transaction of this nature including lender due diligence, formal documentation and credit approval.
Whilst these discussions continue, funds raised under a recent A$11.6 million placement and share purchase plan, Petrosea’s deferred payment terms for up to US$15 million and Indika’s advance of US$15 million in May 2020 will allow significant progress in Awak Mas pre- development decision activities.
Meanwhile, a drilling programme is underway to lift the resource category to ‘Measured’ status in the initial mining areas. In addition, Nusantara believes there is potential to further extend the proposed Awak Mas (Main) and Salu Bulo pits. There is also opportunity to extend the mine life or to support expansion with the possible inclusion of the Tarra deposit and other known exploration targets on the Contract of Work
