Far East Gold eyes ASX debut in new year with portfolio of advanced ‘high quality’ projects

Far East Gold is the latest IPO set to hit ASX boards in the new year, and it’s bringing to market the Woyla project in Indonesia, which the company describes as “one of the most prospective undrilled gold projects in Indonesia”.

The company launched its IPO earlier this month where its seeking to raise between $8 million and $12 million via the issue of a maximum 60 million shares at $0.20 each.

Its shares are scheduled to begin trading on the ASX mid-next month under the ticker ‘FEG’.

Far East’s ASX listing will give investors exposure to its portfolio of advanced and highly prospective gold and copper projects in Indonesia and Australia.

The portfolio comprises six projects – three in Indonesia and three in Queensland. The assets are in “world class” gold producing regions and host numerous walk-up drill targets.

To-date, previous owners have spent about $40 million on exploration across the portfolio.

Indonesia is a large contributor to global mining

Far East chairman Paul Walker pointed out that Indonesia represents an “attractive opportunity” for mining companies due to its fast-growing economy and wealth of natural resources.

“Due to its large mineral reserves and comparatively low costs of operation, Indonesia is one of the world’s largest contributors to the global mining sector.”

Indonesia is the six largest gold producing nation worldwide and the 12th largest copper producer.

Woyla copper-gold project

Far East’s flagship asset is the Woyla copper-gold project, which is located on the Indonesia’s Aceh Province.

The project covers 24,260 hectares of ground and Far East has secured a purchase agreement to acquire 80% of the asset, with the option to boost ownership to 100%.

Woyla is on the Sunda Magmatic Arc, which hosts other world class copper-gold deposits including Beutong (Asiamet Resources), Miwah (Baru Gold), Martabe (Agincourt) and Pungkut (Sihayo Gold). These deposits have multi-million-ounce gold endowments, and copper and silver are also present.

Far East says “vast portions” of the Sunda Magmatic Arc remain underexplored.

The company’s Woyla project has previously attracted the interest from majors including Barrick which explored the ground in the mid-to-late 1990s.

Then, in 1999, Newcrest Mining (ASX: NCM) beat out Aurora Gold, Billiton and Western Mining to lock-in ownership of the project. It explored the area from 1999-2002.

Barrick and Newcrest’s activities at the project have included early geophysical surveys, sampling, and mapping.

Trench sampling over the Aloe Eumpeuk prospect unearthed 16m at 2.93 grams per tonne gold and 2g/t silver, including 9m at 5.16g/t gold and 2.41g/t silver; and 1m at 28.3g/t gold and 9.9g/t silver.

As a result, 5,000m of gold strike has been firmed up at Woyla, along with four priority prospects: Anak Perak, Aloe Rek, Rek Rinti and Aloe Eumpeuk.

All four gold prospects have walk up ready drill targets.

Copper potential

Copper has also been identified at the Beurieung prospect within Woyla.

Far East noted numerous major international copper miners have previously been attracted to copper porphyry deposits in the region.

These majors include Rio Tinto (ASX: RIO) and Phelps Dodge.

Freeport McMoRan and Asiamet drilled the nearby Beutong deposit and formulated a JORC resource of 2.4 million tonnes of contained copper and 2.1 million ounces of gold.

Barrick undertook channel rock chip sampling at Far East’s Beurieung prospect and returned 40m at 0.13% copper and 0.12g/t gold.

Far East has reprocessed airborne magnetic and radiometric data for Woyla and noted various potential copper anomalies in and around Beurieung.

Trenggalek project

The second of Far East’s three Indonesian projects is Trenggalek, which covers 12,813ha in east Java and has a mining permit.

The Indonesian Government has actually categorised Trenggalek as a top three priority greenfield gold project – giving the asset that all-important government backing.

Similar to Woyla, majors have previously explored Trenggalek.

One of Indonesia’s largest mining companies PT Aneka Tambang was on the ground at Trenggalek in the 1990s, while Anglo American in joint venture with ARC Exploration reviewed the ground from 2012 to 2014.

Work across Trenggalek has comprised 14,530m of drilling, air and ground geophysical surveys, geological mapping, and sampling.

Far East has likened Trenggalek mineralisation to that of PT Merdeka Copper Gold’s flagship Tujuh Bukit operation which has an endowment of 30.1Moz gold and 18.9Mlb of copper.

During their tenure, Anglo American and ARC Exploration completed a technical evaluation of Trenggalek.

The evaluation noted “the prospectivity of the Trenggalek project to host world class porphyry style copper-gold mineralisation is tremendous”.

Exploration so far at Trenggalek has identified the Sentul, Sumber Bening, Buluroto, and Singgahan prospects.

Previous drilling at Sentul hit mineralisation in several holes with a highlight intercept of 9.65m at 4.51g/t gold and 8g/t silver, including 2m at 17.2g/t gold and 13g/t silver from 111.35m.

Wonogiri project

Far East’s third project in Indonesia is Wonogiri which covers 3,928ha in central Java. It is an advanced project with an exploration mining permit and a resource of 1.15Moz of gold equivalent.

The shallow deposit is open at depth, with Far East saying there is potential to build on it with adjacent epithermal veins.

Exploration to date at the project has comprised almost 20,000m of drilling.

Metallurgical test work has produced “excellent results” with up to 89% gold recoveries and 93% of copper via flotation.

A scoping study in 2016 estimated capital expenditure of US$38 million would be required to get an open pit operation up and running for an initial 11 years.

The study forecast cash flow of US$226 million, but was based on much lower commodity prices of US$1,350/oz gold and U$5,500/t copper.

Gold is currently attracting US$1,781/oz, while copper is hovering at US$9,285/t.

Queensland projects

Back in Australia, Far East owns Hill212, Blue Grass Creek and Mount Clark West in Queensland.

Hill212 is on the highly prospective Drummond Basin and is 30km east of Mt Coolon.

Far East says it is in the “geological vicinity” of the privately-owned Pajingo gold mine, which has produced more than 3Moz of gold at 10g/t since 1996.

Other nearby gold deposits include GBM Resources’ (ASX: GBZ) Koala and Glen Eva assets.

Prior to Far East’s ownership, Medusa Mining (ASX: MML) completed a seven-hole scout drilling program at Hill212, which totalled 562m.

Meanwhile, previous rock chip sampling returned up to 6.93g/t gold and 37.3g/t silver.

Surveys have firmed up 11 walk-up drill targets, which would require about 2,700m of drilling at Hill212.

Adjoining Hill212 is Blue Grass Creek, which Far East says represents an early-stage prospective target.

Recent exploration has identified a northeast trending structural corridor that crosses from Hill212 into Blue Grass.

Mount Clark West

Far East’s last project is within the Connors Arc in central Queensland and is only 24km northwest of Nebo and 100km from Mackay.

Connors Arc hosts major deposits including Evolution Mining’s (ASX: EVN) former Mt Carlton gold mine, which Navarre Minerals (ASX: NML) acquired this month.

Geophysical and geochemical surveys at Far East’s Mount Clark West project have identified a large-scale anomaly.

Previous exploration hit 104m at 0.1% copper, including 14m at 0.23% copper. However, Far East noted drilling hadn’t intercepted the higher-grade system core.

Next steps

Following its ASX-listing, Far East has a swath of activities planned across its projects.

Exploration will comprise mapping and more geophysical surveys to assist with drill targeting.

This will be followed by scout and resource drilling programs and other ongoing field work and data compilation.

Experienced leadership

Steering the company after listing will be a board and management team that, combined, has raised more than $1 billion.

The team also has a successful track record of mine development in Indonesia.

In the chairman position is Paul Walker, who has more than 30 years’ industry experience. Shane Menere is the chief executive officer, and he has been based in Indonesia for 13 years.

Mr Menere has more than 25 years’ experience in resource and infrastructure projects, with 15 years of that working at some of the Asia Pacific’s largest mine sites.

Making up the rest of the board are Marc Denovan as chief financial officer, plus Justin Werner and Dr Chris Atkinson as non-executive directors.

All board members have decades of experience, with Mr Werner currently managing director of Australia’s largest pure nickel producer Nickel Mines (ASX: NIC).