Nusantara Resources Ltd (ASX:NUS) will use $10.25 million in placement funds to help advance its Awak Mas Gold Project in Indonesia, which hosts a 1.1 million-ounce ore reserve within a 2 million-ounce resource.
The company has entered into a subscription agreement with PT Indika Energy Tbk's wholly-owned subsidiary PT Indika Minerals Investindo, for a placement of 30.6 million shares with a value of $7.04 million.
This will give Indika, an integrated energy and resources company, a 19.9% interest in Nusantara.
AustralianSuper subscribes for further shares
Existing shareholder AustralianSuper has also committed to subscribing for 11.2 million shares to raise $2.6 million, subject to shareholder approval, lifting its stake to 14%.
Subject to Nusantara shareholder approval, Indika will then subscribe for a further 2.8 million shares totalling $640,000, which will see it maintain a 19.9% interest.
The securing of strategic cornerstone investor Indika is another milestone for the company and follows the completion of a definitive feasibility study.
Nusantara's major shareholder, Lion Selection Group (ASX:LSX), with 32.32%, fully supports the placements to Indika and AustralianSuper.
Managing director Mike Spreadborough said: “The Board of Nusantara welcomes Indika as a shareholder and looks forward to the contribution Indika will make to exploring avenues for the financing and development of the Awak Mas project.
“Indika’s investment in Nusantara is a significant milestone in progressing the project and demonstrates the value of this low-cost, long-life gold project and its exceptional exploration potential.
“Indika brings a wealth of Indonesian operating experience through its extensive resources and energy activities across Indonesia.”
Funds to advance project development
Funds will be applied to advance the development of Awak Mas through further optimisation studies, near-mine exploration, preparations for project construction, advancing financing and general working capital.
Spreadborough said: “We look forward to the ongoing support and advice of Indika’s highly credentialed Board of Commissioners and Board of Directors as we accelerate and assess avenues for the development of the project during 2019.
“I would also like to thank AustralianSuper for its ongoing support, which further validates the significant potential of Awak Mas.”
Ongoing strategic relationship
Indika and Nusantara have entered agreements that define an ongoing strategic relationship between the parties.
This will focus on exploring avenues for completing the financing and development of the project, which is in South Sulawesi.