SOUTHEAST ASIA SPECIAL — Indomin forges ahead with programs in Indonesia

With a recent listing on the Vancouver Stock Exchange, a substantial private placement deal and years of experience in Indonesia, Indomin Resources is poised to become a major player in Southeast Asia.

Formed as a consulting firm in 1989, Indomin has worked with many of the majors operating in Indonesia and its familiarity with the country’s geologic and political terrain has given the company a firm foothold there during the exploration boom.

Following its listing in December, Indomin closed a private placement of special warrants worth $13 million. The proceeds will be applied to numerous Indonesian projects.

The company is currently working an advanced diamond play in southern Kalimantan, a heavy mineral sands project on the northern coast of Irian Jaya, as well as gold targets on the islands of Sulawesi and Kalimantan.

On the southeastern coast of Kalimantan, near Banjarmasin, Indomin is searching the paleogravels of the Maluka valley for diamonds, and holds 60% of the Martapura diamond project, where it is currently conducting a bulk test to determine the deposit’s grade and tonnage. The site is downstream from Ashton Mining’s diamond discovery.

Recent drilling has confirmed that the diamondiferous Maluka paleovalley system in Indonesia extends through Indomin’s Martapura property. By the end of April, the company had completed 164 holes totalling 4,532 metres and discovered two east-west paleochannels within the 9-km-long property. A pair of macrodiamonds was recovered from the southern channel, while the northern channel returned high counts of the indicator mineral rutile.

“We aim to have a bulk sample site located for determining in situ diamond grades at Martapura by the third quarter,” says Lee Spencer, senior vice-president of exploration.

An independent study estimates that Indomin could dredge 5.4 million cubic metres of alluvial material per year from Martapura at an operating cost of 75 cents per cubic metre.

Using these figures, Indomin has calculated a break-even grade of 0.04 carat per cubic metre for the Martapura project. Bulk testing at an adjoining project held by Ashton Mining and Malaysian Mining returned a grade of 0.1 carat per cubic metre.

Indomin has a 60% interest in Martapura. The remaining 40% is held by PT Indorope Berliannusa. Upon completion of a feasibility study, PT Indorope must contribute its share of capital financing or dilute to a 20% interest.

Offshore, Indomin holds 30% in 36 million tonnes of diamondiferous gravels in the Sunda Shelf project, where submarine dredging will be carried out if a production decision is made.

Indomin estimates the project’s profits could top US$14 million per year.

“For every increase in grade of 0.1 carat, we could see another US$20 million per annum,” says Vice-president Paul Loudon.

The company also controls 60% of 292,525 hectares along 250 km of coastline in northern Irian Jaya, where its Kumamba heavy mineral sands project is situated. Indomin, which has invested $2 million in exploration there so far, has identified a potential resource of 450 million tonnes with a minimum heavy minerals content (including rutile, leucoxene, ilmenite, magnetite, zircon and gold) of 5%.

Long-term prospect

“Such a large deposit, if operated at a profit, should provide capital for us for years to come,” Loudon says.

Indomin controls 85% of the Busang North, a 127,644-hectare property northeast of Bre-X Minerals’ (ASE) Busang gold discovery in eastern Kalimantan.

The first phase of exploration at Busang North uncovered abundant free gold and sulphide minerals, and follow-up work there will prepare the property for drilling later this year.

Carlin-type potential

Indomin also has the rights to 735,000 hectares on the island of Sulawesi.

The project area (90% of which Indomin controls) covers a carbonate sedimentary sequence with known hotspring deposits along major thrust faults.

Here, the company sees potential for large Carlin-type carbonate replacement mineralization similar to that found at Newmont Gold’s Mesel deposit in northern Sulawesi.

Indomin will fly an 8,500-km aeromagnetic survey in June and begin an exploration program in September.

Indomin controls several other gold prospects in Indonesia, including the Sungai Keriyau prospect, which covers 34,560 hectares in western Kalimantan.

Northwest-trending faults and fractures there intersect a major northeast-trending belt of gold occurrences. According to Indomin, these intersecting zones have the potential to host Busang-like gold orebodies.

Indomin’s projects also include: the Batu Dayreuh, in western Kalimantan, which covers 94,000 hectares within a graben structure in Cretaceous volcanics; the Pulau Maya, which consists of five mineral licences covering 26,000 hectares on Maya Island, off the western coast of Kalimantan; and the Putussiau, acquired in January, which covers 230,000 hectares in central Kalimantan. Indomin has identified three types of epithermal gold occurrences there.