In an agreement with Indonesian industrialist Jusuf Merukh, Ag Armeno Mines & Minerals (AGM-V) has taken an option to buy an 18% interest in the Batu Hijau gold deposit on Sumbawa Island in Indonesia.
Merukh has agreed to sell 90% of the shares in Pukuafu Indah, the Indonesian-based partner of U.S. gold producer Newmont Gold (NGC-N) and Japanese conglomerate Sumitomo, to Ag Armeno for US$2 million and 50 milion shares. Pukuafu Indah holds a 20% stake in Batu Hijau; Newmont holds 45% and Sumitomo 35%.
The transaction is conditional on approval by Ag Armeno shareholders and by regulatory authorities in both Canada and Indonesia.
Batu Hijau, one of the largest undeveloped gold resources in the world, has a published reserve figure of 913 million tonnes grading 0.53% copper and 0.4 grams gold per tonne.
Construction is under way on a 120,000-tonne-per-day mill, open-pit mine, port, power station and townsite. Production is expected to start in 1999.
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