PT Indika Energy Tbk (IDX: INDY) expanded into the gold mining by investing around US$40 million in the Awak Mas project in Luwu Regency, South Sulawesi - Photo by the company.

JAKARTA (TheInsiderStories) – Indonesian miner, PT Indika Energy Tbk (IDX: INDY) expanded into the gold mining by investing around US$40 million in the Awak Mas project in Luwu Regency, South Sulawesi. The gold mining project was developed by PT Masmindo Dwi Area, a subsidiary of Nusantara Resources Ltd (NUS), an Indika partner listed on the Australian Exchange, said the company on the written statement on Monday (12/09).

Indika Energy’s Corporate Secretary Adi Pramono said this transaction was the company’s step to diversify the business. During that time, Indika has been more focused on the coal mining business.

To realize this, Indika has done a non-binding term sheet with Nusantara, PT Petrosea Tbk (IDX: PTRO) and Masmindo Dwi Area. From the agreement, the company will invest $15 million in the first phase and $25 million in the second stage.

Meanwhile, Indika through its unit, PT Indika Mineral Investindo (IMI), had invested $456,000 in Nusantara Resources through private placement by acquiring 2.78 million Nusantara’s shares. The deal made IMI owns 19.9 percent share at the Australian miner.

It said, Nusantara Resources used the funds to continue the development of the Awak Mas Project in Toraja, South Sulawesi. The block has an estimated ore of 1.1 million ounces and resources of 2 million ounces.

Beside acquired the gold mining project, Indika through its unit had acquired 15 percent or 2,63 million shares of PT Multi Tambangjaya Utama (MUTU) from Prime Empire Investments Pte Ltd. The value of the transaction worth $9.9 million. As such, 100 percent of MUTU’s share owned by the miner through its two units, PT Indika Indonesia Resources of 85 percent and Indika Capital Investments Pte. Ltd 15 percent.

MUTU has been operating since 2012 and has total assets before the elimination of $69.43 million as of March 31, 2019. While, Prime Empire is an investment company founded in 2010 and based in Hong Kong.

MUTU has a thermal and coal asset in Central Kalimantan, with a concession area of ​​24,970 hectares. It is located around 30 km northeast of Ampah city and about 250 km north of Banjarmasin, South Kalimantan. The company built a coal haul road with a capacity of 3 million tons per year and a barge port with a capacity of 5 million tons per year.

Indika was established in 1982, and the contract will expire in 2023. Estimated coal reserves owned by Kideco are 422 million tons with 50 consumers in 16 countries. The main destination is China and India.

Indika’s coal business in 2012-2015 did slow down due to sharply falling prices on world markets but began to crawl up in early 2017. As a result of the price decline, the company was hit but still managed well by increasing efficiency.

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