KEM expects lower losses in 2001

KELIAN, East Kalimantan (JP): Gold mining company PT Kelian Equatorial Mining (KEM) expects its financial losses to be lower at about US$5 million this year compared to $10 million in 2000.

Company president Charlie Lenegan said on Saturday the decline was mainly due to the reduction of waste rock being moved from the pit to the storage area.

"The less waste rock is moved, the lower the transportation costs will burden us," he told a group of reporters who visited the company's mining site.

KEM commenced its gold mining operation in Kelian, Kutai Barat regency, East Kalimantan province in 1992, after the discovery of an indicated reserve of 85 million tons of ore with an average gold gauge of 1.9 gram per ton in 1989.

KEM, which is 90 percent owned by Anglo-Australian giant Rio Tinto group and 10 percent by PT Harita Jayaraya will end its mining activities in 2004 as there is no more gold ore in the mine site.

Last year, the company moved about 25 million tons of waste rock from the mine site to the storage area.

The company also processed about 6.2 million tons of ore, producing about 338,000 ounces of gold and 326,000 ounces of silver.

Charlie said this year's gold production would be about the same level as last year's.

According to him, gold price currently stood at about $266 per ounce, slightly lower than last year's price of $270 per ounce.

He added that gold had to be traded at $380 per ounce to be profitable to the company.(05)