Aurora committed to Indonesian mine

Aurora committed to Indonesian mine

CANBERRA (Dow Jones): Australian-based gold miner Aurora Gold Ltd. is committed to its Mount Muro project in central Kalimantan, Indonesia, but still wants to sell its suspended Toka Tindung operation in northern Sulawesi, Chief Executive Alan Scott said Tuesday.

Indeed, Aurora, which is 35 percent-owned by global mining giant Rio Tinto PLC, is evaluating and clarifying details of offers for Toka Tindung, he said.

"I don't think it will be a long time before we've actually got something to announce there," he told Dow Jones Newswires in an interview.

Rio Tinto acquired its stake in Aurora following its acquisition of Australia's Ashton Mining Ltd. in 2000.

Aurora put its 85 percent-owned Toka Tindung gold project on care and maintenance in September 1999, when in a major period of unrest in Indonesia, the satellite Talawaan operation was overrun by thousands of illegal miners.

It announced early in 2001 it wanted to sell the project, which has been written off completely in the company accounts, to stem the "cash bleed" and to focus on other interests.

Scott believes a sale of Aurora's interest in Toka is possible, despite the illegal miners remaining at Talawaan and a lack of action by authorities to resolve the problem.

That is because Talawaan is isolated geographically from the main Toka mine site, and because Toka needs to be mechanically mined.

"It's those two combinations that give us a possibility" to sell, he said, while admitting any sale will be difficult.

"The viability of an operation at Toka isn't affected by the loss of Talawaan," he said.

The company is seeking a buyer as soon as possible that is prepared to explore the area further and provide Aurora with an income if and when mining is resumed, he said.

Scott agreed an Indonesian company will have more leverage over authorities to resume operations.

Aurora was hard hit as lawlessness hit many parts of Indonesia in recent years. It posted a A$93.9 million loss in fiscal 1999, with most of this coming from a full 100 percent or A$67 million writedown of its Toka Tindung assets.

The company also wrote off A$30 million from the value of its Mt. Muro operations in Kalimantan in 1999, but remains committed to the project.

Mt. Muro gold equivalent output jumped 13 percent to 253,250 ounces in 2000 from 224,085 ounces in 1999.

This lift in production occurred despite serious constraints by illegal mining in the first half of calendar 2000, which corresponds to its fiscal year, the company said.

Since then things have been quiet following action by nearby communities and authorities against illegal miners, who remain in the area, Scott said.

But overall "touch wood things are extremely good there," he said.

Now, he said, Aurora has pushed a lot more money into exploration at Mt. Muro and intends to provide details of new exploration success at the project at Wednesday's scheduled annual general meeting in Perth.

The Mt. Muro contract of work area was previously believed to cover two volcanic areas only, he said.

"We believe there's a third there and identified it and have actually got some good results," that will be announced at the meeting, he said.