J Resources to Invest in Gold Plant in Sulawesi

Rock ore is transported in mine cars at the Aneka Tambang (Antam) gold mine in Pongkor, West Java, Indonesia, on Thursday, Nov. 7, 2013. (Bloomberg Photo/Dadang Tri)

J Resources Asia Pacific, an Indonesian gold mining company, plans to spend as much as Rp 2 trillion ($163 million) building a new gold processing plant in Gorontalo province, northern Sulawesi.

The plant will be built on a 7,000-hectare plot of land owned by its subsidiary, Puncak Emas Gorontalo, according to Edi Permadi, J Resources’ corporate secretary. It is targeting output of 100,00 troy ounces of precious metals per year by 2016.

J Resources, formerly known as Pelita Sejahtera Abadi, is a holding company with subsidiaries mostly in the gold mining industry.

“We’re still doing some additional drilling right now,” Edi said on Thursday. “The construction alone is going to cost up to Rp 2 trillion.”

Edi said that the additional drilling was necessary because the company will form a joint venture with Dharma Tani Marisa, a village cooperative within Gorontalo province.

Puncak Emas Gorontalo and the cooperative have already signed an agreement for the project.

“If it’s approved by the board, we will proceed with the joint venture with the village cooperative as the major shareholder,” said Edi, who is also the director of Puncak Emas Gorontalo.

He added that Dharma Tani’s land has almost 1 million troy ounces of precious metals, which is expected to reach a total of 2 million troy ounces when combined with 7,000 hectares of land nearby owned by Puncak Emas.

If the board gives its approval, the joint venture will continue its mineralization and feasibility study before starting construction on the plant.

J Resources, through its unit J Resources Nusantara, secured a $275 million five-year bank loan in November this year, which would be used to refinance its debt and expand the company.

The lenders included Indonesia Eximbank, Qatar National Bank SAQ, Bank QNB Kesawan, Bank Permata and Bank ICBC Indonesia.

The loan would be used to pay off an outstanding loan to Bank CIMB Niaga and Indonesia Eximbank.

In addition, the loan would be used to develop gold production in Bakan in northern Sulawesi) and in Seruyung, in northern Kalimantan, as well as to increase the capacity of a mine in Penjom, in the Malaysian state Pahang, the company said in a statement.

J Resources, based in Jakarta, is active in a number of mines in Kalimantan and Sulawesi.

Shares of J Resources fell 1 percent to Rp 2,375 on Friday, compared with a 0.7 percent increase in the main stock index.

  • AlanBruceDavies

    Eximbank is lending money to pay off an Eximbank loan? They must have a lot of confidence in the project. The capital which can be used for developing it is only “loan amount” minus “previous loans”; i.e., new money isn’t created by such moves. In effect, the new project has to be profitable enough to cover two groups of loans, the new and the old. Or, to put it another way, it will have to operate with a reduced capital to cover the new group of loans. It would have been interesting to see the amounts of the new and old loans.

  • LUWANTO

    Luwanto@ Greenbug,
    I share your thoughts. This is only referring to a gold smelter plant which is usually smaller than those bauxite smelters (costing $1 Billion at least). How can the Min.of Mines explain e.g. 20 smelters to be built in Sulawesi? Has he got PLN to provide the power and all the ancillary infrastructure, roads and ports for the exporters to see a basic feasibility to invest? Who pays? If not, it is just like a take it or leave it matter! No?
    He is talking NUTS and dreaming of what kind of income his dept.can pick up e.g. yearly reg.of plants, PPN on sales volumes, etc.etc. Did he explain all these problematic issues to the Dewan and SBY? If so, why did SBY approach Pak Yusril for assistance?
    If there is a need to rate your performance on a scale of (1 to 10) you have got just 1 vote from me. How about you Greenbug?
    LUWANTO
    30 Dec 2013