Baru Gold Corp said mining contractor CV. Mahamu Hebat Sejahtera has signed a binding contract to operate and produce gold at Baru’s Sangihe project in Indonesia.
There were no significant changes between this contract, signed on August 4, 2023, and the intent of the Memorandum of Understanding announced on August 3, 2023, the company said.
However, Baru Gold said in the interest of shareholders it has decided to allocate the 65 hectares in multiple phases and, as such, the first phase with the contractor involves only 15 hectares of land.
The allocation method gives Baru Gold greater control, assurance of the contractor’s legal and environmental compliance, and the option to develop its own operation, the company said.
The contractor will use its own funds to operate and expand the existing mining operation within the 15 hectares and it will pay Baru Gold approximately C$670,000 based on the land area and estimated gold content.
The contractor will immediately restart an existing recently producing gold mine within the contracted area where equipment is already on site, land has been cleared, and construction completed.
The contractor anticipates cash flow will be generated within two months.
Baru Gold highlighted that it maintains total control over the Sangihe project and that it will supervise all activities and co-process the gold. It will also be responsible for refining the gold and distributing the resulting funds, it said.
Per the agreement, the contractor will receive 65% of the total gross receipts from the sale of gold recovered and Baru Gold will receive the remaining 35%.
The agreement is a win for the environment, the company, and Indonesia, according to Baru Gold CEO Terry Filbert.
“By licensing a previously unpermitted mine, the company is raising the legal protections for workers and forcing environmental protections and rehabilitation on Sangihe, including the clean-up of and prohibition of mercury,” he said in a statement.
“Mining on Sangihe has a long history and this is the first time any mine on the island has followed environmental standards and protections, including ecological restoration”
Filbert added: “The company has the opportunity to achieve cash flow almost immediately, with no dilution to shareholders.”
Baru Gold is a dynamic junior gold developer with NI 43-101 gold resources in Indonesia, one of the top 10 gold-producing countries in the world.
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