Nusantara advances Awak Mas gold project financing discussions
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Special Report: Indika’s $US15m investment for 25 per cent of the Awak Mas gold project and a newly completed Independent Technical Expert (ITE) report are “significant steps” on the path to production, Nusantara Resources (ASX:NUS) says.
Cashed up project developer Nusantara Resources is attracting strong investor interest as it targets listed 2022 commissioning from Awak Mas – Indonesia’s next gold mine.
A DFS addendum, released in June, upgraded the project’s already strong economics.
Higher confidence reserves have now increased by 34 per cent from a 2018 estimate to 1.53moz, driven by successful exploration results, improved mine planning, and a higher gold price.
Mine life has been extended to 16 years and production increased in the first four years to 127,000oz per year, up from 106,200oz in the DFS.
NPV (after tax) has improved markedly from $US152m to $US517m. Post tax IRR is now 45 per cent up from 20 per cent.
Upfront capital requirements have increased from $US146m to $US156m, but Nusantara now expects to pay that back in 1.8 years, down from four years in the DFS.
Nusantara is also studying the possibility of expanding the capacity of the processing plant from 2.5mtpa to 3.9mtpa.
“Awak Mas generates significant upfront cashflow at the DFS gold price assumption of $US1,700/oz and is exposed to further upside with record highs above $US1,900/oz,” Nusantara managing director Neil Whitaker says.
“The gold price sensitivity analysis indicates a 28 per cent increase in discounted cashflows to $US661m, driving a rapid project payback of 1.6 years (post-tax)”.
Cumulatively, this makes the economics very attractive as Nusantara pushes to finalise debt finance this year ahead of construction in 2021.
Nusantara, along with its partner Indika, intends to finance the development of Awak Mas through a combination of project debt, mezzanine finance and equity.
The ITE review, commissioned by a consortium of potential financiers, is a standard form of technical due diligence when seeking project financing.
It will allow formal engagement with interested parties, “advancing towards a complete project financing solution”, says Nusantara.
In addition, regulatory approval has now been received for PT Indika Energy to become a shareholder in the Awak Mas project vehicle.
Indika’s $US15m equity investment concludes the financing for the Stage 1 Early Works of the Awak Mas development funding strategy.
“This ITE report and Indika’s equity investment of $US15m for 25 per cent of the project are significant steps for Awak Mas,” Whitaker says.
“Nusantara warmly welcomes Indika into the Awak Mas project vehicle, noting their proven track record in developing, operating and financing mining projects in Indonesia.
“In particular we look forward to leveraging their experience and proven ability to secure bank financing.”
The June 2020 addendum to the Definitive Feasibility Study confirmed Awak Mas to be a high margin development opportunity, and now key technical aspects have been independently validated in the ITE report, Whitaker says.
“This allows Nusantara and Indika to work even closer with interested financiers to obtain a project financing solution.”
This story was developed in collaboration with Nusantara, a Stockhead advertiser at the time of publishing.
This story does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.