Nusantara is looking for funding to develop Indonesia’s ‘next gold mine’
Mining & Resources
Small cap gold hopeful Nusantara Resources will benefit from big margins over the life of its 2 million-ounce Indonesia gold project, a feasibility study has confirmed.
Nusantara (ASX:NUS) — which has had a tough time since listing on the ASX a year ago — completed a “Definitive Feasibility Study” into the 100,000 ounce per year “Awak Mas” project in South Sulawesi, Indonesia.
Explorers undergo a series of feasibility studies in the early stages of a project to understand whether a project is not only technically possible — but can be profitable. There is no internationally agreed standard on feasibility studies, but they usually range from early “desktop” research to through to “pre-feasibility” and “definitive” studies.
Nusantara (ASX:NUS) listed on the ASX a little over a year ago after raising $16.2 million at 42c.
It’s been downhill ever since for shareholders however — the stock is now trading at 19c for a market cap of about $18.5 million.
Nusantara is now looking for money to develop Awak Mas, which has estimated construction and pre-production costs of about $US164 million.
“The Awak Mas Gold Project, through the experience and dedication of the Nusantara team, now has the potential to be developed into Indonesia’s and Asia-Pacific’s next gold mine,” chief Mike Spreadborough told investors today.
He also told Stockhead that there were about 10 groups interested in financing the project.
“Since January we have been running a process of identifying and working with a range of strategic partners, both in Australia and elsewhere in the world,” he said.
“Now that we have released the DFS we will be able to now start to really engage with those groups [based] on the financial outcomes from the DFS.”
The company has estimated a net present value of $US152 million using a gold price of $US1250 per ounce.
NPV is a metric used to assess the profitability of a project; the higher the NPV, the more profitable a project will be.
But this year the gold price has fallen from highs of about $US1360/oz to currently sit at about $US1200/oz.
This price remains comfortably higher than the projects All-In Sustaining Cost (AISC) of US$758 /oz, and there was “significant opportunities to increase value by optimising the current mineral resources and further exploration”, Mr Spreadborough said.
AISC is a comprehensive way to assess if a project is profitable or not, because it considers all the costs associated with production – from mine maintenance and exploration, through to administration and other corporate expenses.