BORNEO Resource Investments has finalized the purchase of a producing gold mining property Ratatotok South, which is near the village of Ratatotok in Southeast Minahasa Regency of North Sulawesi province. It is the company’s second acquisition of a gold producing project and will supplement production from Talawaan.

Ratatotok South is adjacent to the southern border of Borneo’s Ratatotok gold property from which the company plans to start mining in the near future. It is about 8.5 hectares in size and is in a well-established gold reef structure. Significant infrastructure was purchased as part of the transaction including an ore crusher and other processing equipment.

Significant reserve assessment work was completed by the seller who commissioned an independent mining geologist. This involved a comprehensive set of drill tests which show ore grades ranging from 3-15 grams/tonne. Borneo’s geologist estimates that the ore body extends from approximately 15cm below the surface to around 100 metres in depth and covers the entire property.

“This is a significant acquisition for us that will further boost gold production levels, revenues and contribute to gross profits. Based on our analysis, processed ore at this site may produce 99% pure gold,” says Borneo’s CEO Nils Ollquist. “The structure and quality of the ore body means that the extraction process used at Ratatotok South will be significantly less labour intensive and at a lower cost than the extraction method at our Talawaan property.”

The new property was purchased for $250,000, including an initial $150,000 payment in cash and two subsequent payments of $50,000 each. Targeted funding for the acquisition was provided by a private investor and current shareholder of the company through a 5-year loan with an annual interest rate of 5%. The term loan has no conversion provision and no warrants were attached.

“Having Ratatotok South strategically located, with its infrastructure and equipment, adjacent to Ratatotok increases the value of Ratatotok and accelerates our timeline for mining all three gold properties. We are particularly pleased with how we financed this transaction as the lender of the $150,000 note is a current shareholder,” Nils Ollquist concluded.

Borneo has also executed a debt restructuring agreement with the seller of the Talawaan property. Borneo acquired Talawaan for $5 million and owed an aggregate balance of $4,650,000 as of December 17, 2013. As part of a new agreement executed on December 17, the parties have agreed to reduce the balance to be paid by $2.5 million in exchange for 100,000 shares of Borneo stock and a non-interest bearing promissory note.

Borneo started production at Talawaan in June 2013 and completed its first full quarter of production in the third quarter of 2013, putting the company into profitability for the quarter.

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