Australia-based Oxiana Ltd. plans to spend US$310 million this year to construct a gold and silver plant in North Sumatra.
According to Oxiana general manager for external relations Bruce Loveday on Tuesday, the company has secured a contract of work (CoW) for the project as well as the approval for the project's environmental impact analysis, locally known as Amdal.
The project, called the Martabe project, is located in North Sumatra's capital, Medan, and will begin construction in August, after the company secures a construction permit from the Energy and Mineral Resources Ministry.
"All the discussions we have had are very good. A discussion with Pak Sembiring (Simon Sembiring, the director general of minerals, coal and geothermal) says that we may get it (the construction permit) by the end of this month," Loveday said.
The plant is slated to start production at the end of 2009, with a total output of 200,000 ounces of gold and 2 million tons of silver.
The area, with a size of 2,563 square kilometers, has a resource base of 6 million ounces gold and 60 million ounces of silver.
Bloomberg reported that Oxiana, which mines gold, copper and zinc, got the Martabe project after the acquisition of rival Agincourt Resources Ltd. last year.
Loveday said the miner was also considering a partnership with Indonesian companies to expand its operation in the country, adding that negotiations with several local mining firms were underway.
"We can't comment on who we are negotiating with because it is under discussion. But Antam (the state mining company) is one of them," Loveday said.
Loveday said the company planned to offer a 5 percent stake to local governments, as stated in the CoW.
When Antam was ask to confirm, president director Dedi Aditya Sumanagara acknowledged ongoing discussions with Oxiana.
"We are negotiating with Oxiana to buy a stake in the Martabe project," he said without elaborating.
Antam is aiming to raise its business portfolio by either having strategic alliances with other companies or carrying out acquisitions.
It is currently competing with PT Bumi Resources, the country's largest coal producer, to gain a majority stake in another Australian company, Herald Resources, which operates zinc mines in North Sumatra.
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