Southern Arc Minerals is selling its 90% interest in the Taliwang project in return for a combination of cash and shares in the acquiring company in a move to retain upside potential as the new owner advances the project. The remaining 10% of Taliwang, which is held by West Sumbawa Regency Government, will also be sold to Coke Resources. Southern Arc has asked Coke to purchase its 90% share for US$500,000 and 15 million shares (8%) in Coke.
The transaction is contingent on Coke completing its initial public offering of 21 million shares on the Australian Stock Exchange.
Taliwang will be one of two projects in Coke’s portfolio. The Australian-based exploration company was founded in February 2011 to pursue opportunities in Indonesia’s mining sector. The company’s PT Cristian Eka Pratama project is a long-life thermal coal project with established infrastructure in place and is 15km from the Mahakam River in East Kalimantan.
Southern Arc chairman John Proust says, “This arrangement with Coke Resources meets our objectives of increasing the company’s treasury and allowing Southern Arc to focus its time and resources on its priority projects.
“Southern Arc’s investment in Coke Resources brings new opportunities to the company. Through Coke Resources we have exposure to two promising projects. We look forward to seeing progress at both the Taliwang and Cristian projects, yet have maintained financial flexibility for Southern Arc’s shareholders with a liquid, public-company investment,” he says.
The sale agreement comes after a review of Southern Arc’s projects to strategically set out a new focus on the company’s core assets and identify the best opportunities to advance those projects.
Just last month Southern Arc commenced drilling at its flagship West Lombok project, after the review findings recommended a staged drill program at the site. The company expects to produce a NI 43-101 compliant resource estimate for some sections of the property by mid-2013.
Meantime, the company’s East Elang property will be advanced via a joint venture agreement with Vale SA, whereby Vale must fund all costs through to completion of a bankable feasibility study to earn a 75% interest.