London-listed miner Archipelago Resources (AR.L: Quote,Profile, Research) has targeted gold output of about 135,000-145,000 ounces this year, an executive said on Wednesday, after starting production at its Indonesian project late last year.
The company, which runs the Toka Tindung gold mine in north Sulawesi, has also targeted average gold production of 160,000 ounces over the next six years, Matthew Salthouse, the firm’s vice president of investor relations told Reuters on the sidelines of the Asia Gold Summit. [ID:nL3E8HP1SU]
“The gold forecast for this year – our guidance is 135,000 to 145,000 dollar equivalent ounces,” Salthouse said. “For the first six years of the life of the mine, we’re projecting on average, about 160,000 gold equivalent ounces.”
Asia-focused Archipelago Resources also has exploration projects in Vietnam and the Philippines, and a corporate office in Hong Kong.
Its Indonesian gold mine began production in November last year, and meets its domestic processing requirements through Aneka Tambang (ANTM.JK: Quote, Profile, Research), which runs Indonesia’s only precious metals refinery.
Salthouse said his firm has a contract of work (COW) in Indonesia, and sells its gold through the spot market.
Indonesia, the seventh largest gold producer last year, is looking to limit foreign ownership of mines to no more than 49 percent after a decade of production. [ID:nL4E8E73NE]
Archipelago Resources is 52 percent owned by Indonesia’s PT Rajawali Corporation, while other shareholders include Columbia Wanger, Baker Steel (BSRT.L: Quote, Profile, Research), BlackRock Inc (BLK.N: Quote, Profile, Research) and JP Morgan (JPM.N: Quote, Profile,Research).
“For us the divestment issue is resolved because we’ve got two contracts of work – they pre-date the new mining law,” said Salthouse. “For us, the new change in mining regulation doesn’t really have an impact.”
One of the biggest challenges to starting a mine project in Southeast Asia’s biggest economy was the number of permits needed from the different layers of government, Salthouse added.
Fellow gold miner Sumatra Copper & Gold (SUM.AX: Quote, Profile, Research) also flagged this as a challenge earlier this week. [ID:nL3E8HQ2K4]
“Ongoing dialogue and engagement is simple but a proven methodology,” Salthouse said when asked about the best way to overcome such problems. “Ongoing, regular communication and transparency.”