The “game-changing” announcement in August of Eurasian Resources Group’s (ERG) $4 million strategic investment into Far East Gold Ltd (ASX: FEG) opened a lot of doors for the copper-gold explorer.
Far East Gold Chairman, Paul Walker, explained exactly why ERG’s cornerstone investment was so important.
“Not only does ERG bring substantial financial capital and operational experience, but this investment also provides a firm seal of approval about the quality of our management team and the remarkable potential that we have in our portfolio of projects.”
“This was a really important and game-changing outcome for Far East Gold.”
Highlighting the scale of ERG and how beneficial their investment is to Far East Gold’s Indonesian projects, Walker noted the company has an annual exploration budget alone of US$70 million.
The multi-billion dollar global resources company is headquartered in Luxembourg and operates in 15 countries with over 75,000 employees worldwide. Their operations span across the globe and the entire supply chain, from mines to markets, and they have a diverse portfolio across iron ore, copper, aluminium, cobalt and more.
Importantly, ERG’s investment into Far East Gold was at the Group level, rather than into the Company.
ERG has a particular interest in the Trenggalek copper-gold project in East Java, Indonesia, which Far East Gold took 100% ownership of in June this year.
As part of the terms of the strategic investment, Far East Gold granted ERG the Right of First Refusal for the Trenggalek project, to match or better any offer they might receive from other external parties.
The Trenggalek project has already seen significant advanced exploration including 17.8km of drilling, 3,675km of airborne magnetic and radiometric survey, a surface geochemistry survey consisting of more than 10,500 soil and 5,000 rock samples, and induced polarisation resistivity geophysics.
The tenement that is highly prospective for epithermal and porphyry related copper, gold and base metal deposits. It is located within the Sunda-Banda Arc in Indonesia, which is recognized as an important metallogenic belt that is host to several world-class porphyry and related mineral deposits.
While ERG has not worked in Indonesia thus far, FEG believes that the company has a positive view of the wealth of natural resources that exist and have confidence that it is a low-cost jurisdiction.
As a privately held diversified natural resources group that is 40% owned by the Kazakhstan Government, ERG also has political benefits for Far East Gold.
“They have good government connections between Kazakhstan and Indonesia. And another layer of contacts to help with progressing our projects,” Walker stated.
Image: Far East Gold Trenggalek project
Breaking it down further, Walker said that there were benefits beyond ERG’s cash investment for Far East Gold.
ERG has a large exploration team based in Dubai, including world-renowned specialists in copper and porphyry systems.
Not only that, ERG plans to make its whole team and resources available to take these assets forward, including access to expensive software packages.
The resources group operates across the entire mining value chain, and encompasses operational experience of the mines as well as exploration activities.
Expanding on why the cornerstone investment from ERG was so important to Far East Gold, Walker compared ERG to Aussie gold miner Newcrest Mining (ASX: NCM). Newcrest boasts a market capitalization over $21 billion (as at 3 October 2023) and hovers around the 20th largest company on the ASX.
In 2021, ERG reported annual revenues of US$8.53 billion and underlying EBITDA of US$4.21 billion – roughly double the size of Newcrest. They produced a whopping 200kt of copper, twice the amount that Newcrest does.
Not only that, ERG is in the world’s top 3 producers of cobalt.
Stating that the $4 million investment is “just the starting point”, Walker said ERG were keen to take a bigger position in Far East Gold’s projects going forward, as well as in Indonesia more broadly.
“They want to commit more capital as we go forward, so it’s not just this cash that we get to use on exploration… They don’t intend to stop there.”
Showcasing the depth of Far East Gold’s portfolio, while ERG was most interested in the Trenggalek project, their flagship project Woyla – also located in Indonesia – continues to progress. Phase 2 drilling has been extended at prospects within Woyla, following bonanza and high-grade gold and silver results.
Reach Corporate provides Corporate Advisory Services, including managing investor communications on behalf of Far East Gold Ltd and may receive fees for its services.
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