J Resources to spend $238m to boost gold output

PAHANG. Publicly-listed mining company PT J Resources Asia Pacific Tbk is to spend US$82 million to up production at Penjom gold mine in Pahang, Malaysia.

J Resources vice president for human resources and corporate affairs Edi Permadi said at the weekend that the capital outlay included heavy equipment, river diversion and improvement of existing plant.

“This river diversion will allow us to mine for ore under the river,” Edi told The Jakarta Post and Bisnis Indonesia in Kuala Lipis, Pahang, at the site of the mine.

J Resources expects to increase output from Penjom to 57,000 troy ounces this year, up from around 50,000 last year and extend the life of the mine, expected to close in 2017.

The company acquired Penjom through intermediary PT J Resources Nusantara along with several assets in Indonesia from UK mining company Avocet Mining plc in 2011. Those assets were placed directly under J Resources’ control early in 2012.

In its last years of operation, Avocet did not invest significantly in the Penjom mine believing that it would soon be exhausted.

“We believe this new investment will prolong the life of the mine and bring Malaysia more benefit,” executive supervisor of Penjom, Ahmad Zamzamin Hashim said at an event where J Resources presented three funeral vans worth US$110,000 to local people, witnessed by Malaysian Prime Minister Najib Abdul Razak.

The Penjom mine will supply the bulk of J Resources’ total gold output of 103,000 ounces this year. J Resources also owns North Lanut mine in North Sulawesi and expects more production from the Bakan mine, also in North Sulawesi, and from Seruyung in East Kalimantan.

This year J Resources is spending $82 million on Bakan and another $74 million at Seruyung. The bulk of the investment is to build processing plants.

“While other mining companies are still unsure how to meet the requirements of the new mining law, we are already building our plant,” Edi said.

For Penjom, Bakan and Seruyung gold mines, J Resources are spending a total of $238 million, which will be financed internally and through bank loans.

Last year, J Resources secured $135 million in loans from CIMB Niaga and Indonesia Eximbank.

The high investment is justified by the company’s ore reserves and by the high price of gold on today’s market.

At the current price of around $1,600 per ounce, J Resources enjoys a handsome margin with costs of only around $1,000.

The Jakarta Post