Minorca Resources seeks to buy interest in Busang gold project

An agreement with an Indonesian company sets the stage for Minorca Resources (ME) to acquire a 70% interest in 6% of production from the Busang gold deposit in Kalimantan, Indonesia.

Minorca’s agreement is with PT Askatindo Karya Minerals (PT AKM), owner of a 10% interest in Busang being explored by majority owner Bre-X Minerals (ASE). Minorca is required to finance 60% of the 10% interest of PT AKM in the contract of work area held with Bre-X.

Minorca paid US$2 million and issued 3 million of its shares upon signing the agreement, and will pay a further US$2 million once a definitive joint-venture agreement is signed. A US$3-million payment is required after the joint-venture agreement is signed, and US$5 million is to be paid once a final feasibility study has been completed for Busang that shows it hosts at least 12 million oz. gold. Minorca must also pay US$600,000 in cash for every 1 million oz. gold proven up on the property (beyond 12 million oz.).

Minorca also acquired two other Indonesian gold properties, one on Kalimantan and one on Sumatra, for US$200,000 and 200,000 shares.

The junior is seeking financing for the payments required under the agreement. These efforts may be complicated by the fact that Bre-X is disputing Minorca’s right to acquire an interest in Busang. Bre-X says that, under its agreement with PT AKM, no mining rights can be assigned or transfered without its consent. At presstime, consent had not been given. Minorca believes that its transaction complies with the agreement between Bre-X and PT AKM and is not subject to Bre-X’s consent.