Southern Arc Minerals (TSX-V:SA) has signed its second option agreement in Indonesia in as many months, this time with Australian gold mining heavyweight Newcrest Mining (ASX:NCM) for Southern Arc's Taliwang gold-copper property.
Taliwang, whch covers 31,204 hectares, is located in the western portion of the Island of Sumbawa. The deal follows Southern Arc's agreement to option out 75% of its East Elang and Sabalong properties in Indonesia to Brazilian mining giant Vale (NYSE:Vale).
Under the terms of the Taliwang option deal, Newcrest will spend a minimum of US$4 million on the Taliwang project in the first two years through a convertible loan. Once this is completed, Newcrest has the option to convert its loan into 75% of Southern Arc's Singapore subisdiary, which will have an 85% interest in the Taliwang mining permit.
To retain its stake in the project, Newcrest will have to fund a maximum of $46 million in Taliwang or finance the work on the property until the completion of a feasibility study.
Once the deal completes and Newcrest fulfills its obligations, it will earn an effective 63.75% interest in Taliwang, leaving Southern Arc with 21.25%, with the remainder held by the West Sumbawa Regency government and PT. Puri Permata Mega.
The Taliwang property is located 15 km north of Newmont's Batu Hijau mine, along proven secondary NNE to NE and NW trending mineralized structures, Southern Arc said. Newcrest intends to focus the initial exploration program on the Semoan-Ramit-Raboya and Lemonga gold-copper prospect areas.
Both companies said they plan to make definitive agreements with regards to a joint venture by March next year.
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