Australia's Straits in Java gold joint venture

Australia's Straits in Java gold joint venture

SYDNEY (Reuter): Australia's Straits Resources Ltd said yesterday it had entered into a memorandum of understanding with Indonesia's PT Aneka Tambang (Antam) to form a joint venture exploring for minerals and gold in particular in Java.

Antam is wholly owned by the Indonesian government and PT Basya Tunggal Jaya, which represented Indonesian investors.

"The company views Indonesia to be very prospective for the discovery of large high grade epithermal gold deposits, base metals and other commodities and is evaluating further opportunities in Indonesia," Straits said.

Straits would hold a 62 percent interest in the joint venture while Antam and Basya Tunggal Jaya would hold a collective interest of 38 percent.

Straits said it was required to spend a minimum of US$500,000 on exploration during the first year.

"Straits has agreed to fund the total exploration expenditure until the completion of a feasibility study, however, it may withdraw from the joint venture at any time, provided it has met its minimum expenditure commitment."

Antam would reimburse Straits 10 percent of expenditure up to the commencement of production, out of its share of dividends from the joint venture company.

If a mine was to be developed, Straits has agreed to fund, in addition to its own interest, 15 percent of development costs attributable to Antam, which would be repaid out of Antam's share of dividends.

Antam was required to receive all necessary Indonesian Government approvals to enable the joint venture to proceed and this is a condition precedent of the Memorandum of Understanding.

The area of approximately 675 square kms being explored is situated to the south of Bandung in West Java, Indonesia.

Straits Resources' share prices was down two cents at A$1.53 yesterday morning.