A deal between Indonesian company PT Antam and mid-tier miner Oxiana could see the government-backed company progressively obtain 25% of Oxiana’s Martabe mine for more than $US133 million.

The memorandum of understanding with Antam is over potential opportunities in Indonesia where the two companies can form joint ventures or other cooperative ventures.

Oxiana, which has now completed its merger with fellow mid-tier miner Zinifex, says the first deal under the memorandum will see Antam pick up 10% of Martabe for $US66.5 million.

Antam will also be granted an option to buy another 10% for the same price, subject to adjustments for gold price movements, and could then pick up another 5% of the project based on market value of the project at that time.

This final deal would be subject to Oxiana approving the expansion of Martabe to 300,000 ounces of gold equivalent production per year.

Following completion of the sale, Antam will contribute its share of any development costs.

Oxiana is constructing the Martabe gold operation in Northern Sumatra, Indonesia, at an estimated capital cost of US$310 million. Mining will be via open-pit and is initially based on a resource of 6 million ounces of gold and 60 million ounces of sliver.

Planned annual production from Martabe will be 200,000 ounces of gold and 2 million ounces of silver. Commissioning and early production is on schedule for late 2009 with the first full year of production in 2010.

Initial mine life at Martabe is 9 years with potential for extensions to the deposit in the near mine environment and for the discovery of further deposits in the greater 1600sqkm Contract of Work area held by Oxiana.

Antam, which is 65% owned by the Indonesian Government, is one of Indonesia’s largest mining companies and its vertically integrated operations include exploration, development, mining, refining, processing and marketing.

Antam’s expertise and place in the Indonesian mining sector makes it an excellent strategic partner for Oxiana as it aims to expand its business in Indonesia.

www.oxiana.com.au