G-Resources to divest 5% Martabe project shares to local government

Hong Kong-listed G-Resources plans to divest 5 percent of its shares in the Martabe gold and copper project in North Sumatera to local governments, a company official said.

Communication Manager, Katarina Siburian, said that the divestment will be carried out in line with the planned production of the Martabe project, which is scheduled to commence from end Q1, 2012.

?At present, we hold 100 percent shares in the project. When it starts production, 5 percent will be divested to local governments,? she said. Of the divested shares, 70 percent will be owned by Tapanuli Selatan Regency, 30 percent by North Sumatera provincial government.

Katarina said divesting the shares was not a mandatory, instead as an initiative of the company to allow local governments taking part in the development of the project. Under the Sixth Generation of Contract of Work, she said, divesting shares was not a mandatory

Katarina said the local government will not pay in cash, instead with dividend that they will receive from the project. Moreover, they will not pay the whole equity. Only operational costs of the total costs that will be taken into account in calculating the amount of equity local governments will pay.

Total investment to be injected by the company in developing the Martabe project, from exploration to production, is estimated to reach US$ 576 million.

Initially, the company plans to commence production at the end of this year, however, due to expected rainy season to peak at year-end, the company decided to delay the maiden production at end quarter one 2012.

The company targets to produce gold of 250,000 ounce per annum and copper at 2-3 million ounce per year. The production target is only from one pit, which is expected to last for nine years.

The company has no plan yet to build a smelter plant, arguing that building a smelter plant is not commercially viable at this stage. (giok)