The well-funded Far East Gold Ltd (ASX:FEG, OTC:FEGDF) plans to accelerate the growth of its portfolio with the pending acquisition of up to 100% of the Idenburg Gold Project in Papua province of Indonesia.
The company has executed a Conditional Share Purchase Agreement (CSPA) with PT Iriana Mutiara Idenburg (IMI (LON:IMI)). Under a Contract of Work (CoW), the CSPA will initially allow FEG to acquire a 51% interest in the project, subject to meeting agreed conditions.
The Idenburg project, which spans 95,280 hectares, is in a region known for hosting world-class gold and copper deposits, including Grasberg (+70 million ounces of gold), Porgera (+7 million ounces), Frieda River (20 million ounces) and Ok Tedi (20 million ounces).
Map showing the location of the Idenburg COW in Papua Indonesia relative to the locations of world-class multi-million
ounce gold-rich porphyry copper deposits.
Combined, these account for millions of ounces of gold.
The acquisition is being facilitated through the company's long-standing Indonesian partner, with whom it has had a fruitful relationship via the Woyla project.
“The Idenburg acquisition catapults FEG into the realm of a Tier-1 world-class asset holding portfolio," FEG managing director Shane Menere said.
“The project boasts excellent logistics by way of the project area being intersected by the national highway and located only a few hours’ drive from the capital of Jayapura.
"Add to that, a very pleasing independent exploration target, excellent recoveries and metallurgies of greater than 95%, a highly experienced in-country team, and a recent partnership with strategic investor Xingye group, and I feel we are well positioned for rapid company-wide project development.
"All these ingredients have come together at the right time for FEG to capitalise on the strong market outlook for gold. These are very exciting times for Far East Gold.”
Significant intercepts
The project has produced several results in the past with strong intercepts from which FEG can draw from.
Previous results include:
Sua Prospect, 22 holes (2,629 metres):
- 16 metres at 2.38 g/t gold from 0 metres;
- 7.5 metres at 16 g/t from 21 metres, including 1.6 metres at 52.5 g/t;
- 1 metre at 33.8 g/t from 123 metres;
- 9 metres at 4.0 g/t from 80 metres, including 1 metre at 25.8 g/t;
- 5 metres at 21.8 g/t from 107 metres, including 3 metres at 35.0 g/t from 107 metres;
- 18 metres at 2.05 g/t from 0 metres and 3 metres at 17.7 g/t from 55 metres; and
- 17 metres at 2.88 g/t from 0 metres.
Channel samples:
- 3 metres at 73.1 g/t gold;
- 6 metres at 43.7 g/t;
- 4 metres at 52 g/t;
- 3 metres at 65 g/t; and
- 2 metres at 83.9 g/t.
Mafi Prospect, 23 holes (1,642 metres) -
- 15.5 metres at 2.27 g/t gold from 0 metres; and
- 12.6 metres at 8.01 g/t from 6 metres, including 1.25 metres at 25.7 g/t from 15.75 metres and 8.1 metres at 7.50 g/t from 14.4 metres, including 1.4 metres at 16.3 g/t from 18 metres.
Channel samples:
- 8 metres at 11.0 g/t gold; and
- Outcrop - 1,018 g/t.
Bermol Prospect, 7 holes (771 metres):
- 5 metres at 5.40 g/t gold from 16 metres, including 2 metres at 11.8 g/t from 17 metres;
- 5 metres at 4.15 g/t from 46 metres, including 3 metres at 7.08 g/t from 46 metres;
- 7 metres at 2.78 g/t from 65 metres, including 4 metres at 4.15 g/t from 66 metres; and
- 3 metres at 4.89 g/t from 0 metres.
Idenburg project area showing numerous prospects with high-grade gold intersected in surface samples and drill holes. Historical exploration by IMI reports surface rock assays of up to 1,018 g/t gold, 737 g/t, 270 g/t and 312 g/t from Mafi prospect area. All of the areas shown are within the current CoW.
Commercial terms
FEG has established commercial terms for the acquisition of Idenburg, beginning with an exclusivity period and subsequent staged investments. During the exclusivity period, FEG has paid A$150,000 and secured three months to complete a binding CSPA.
To move to a 51% ownership, FEG will pay A$250,000 upon signing the CSPA and issue at least 2.5 million fully paid shares to the vendors, with a minimum valuation of A$0.10 per share or A$250,000 worth of shares, whichever is greater.
Additionally, FEG must spend A$5 million within 24 months of the CSPA signing or deposit equivalent funds into a working account for project use. The company will also issue A$6.5 million worth of shares, subject to shareholder and regulatory approvals.
To achieve 80% ownership, FEG must complete an Indonesian feasibility study to transition the CoW from the exploration phase to a 30-year mining operation.
For 100% ownership, the vendors have the option to retain a 20% economic interest under terms in the CSPA or convert it to a 2% Net Smelter Royalty.
A shareholder loan of US$16 million will be repaid from future operating proceeds, either in cash or a combination of 50% cash and 50% shares, depending on FEG’s agreement.
Finally, a milestone payment will be triggered if FEG announces a JORC-compliant mineral resource estimate of at least 1 million ounces of gold, with a minimum average grade of 0.5 g/t, within five years. Upon achieving this, FEG will issue 13 million fully paid shares, subject to approvals.