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Lion Selection Group takes punt on Indonesia

Lion Selection Group Ltd. is investing in a gold project in Indonesia and says it has no concerns that the country’s revision of its mining laws will impact its development.

With the turn of the cycle, the listed investment group — which focuses on early-stage companies — has made a couple of large investments, and is particularly focused on One Asia Resources Ltd.'s 2.8-million-ounce Awak Mas gold project in Indonesia.

Lion Selection Group and Asian Lion own a combined equity stake of 36% in One Asia Resources, which also owns the Pani gold project in Indonesia.

"We didn’t go to Indonesia looking for a project," director Hedley Widdup told SNL Metals & Mining on the sidelines of the Precious Metals Investment Symposium in Sydney, Australia, on Oct. 11.

"We saw the project and the situation and we invested it and we went through a long exercise of trying to assess the risks, and having said that we’ve had to get ourselves a partner involved because Indonesia is a tough place to be."

According to Lion Selection Group, Awak Mas appears to be an attractive project development opportunity at the pre-feasibility study stage. One Asia is assessing its options for funding and managing a definitive feasibility study.

While developing a project in Indonesia is harder than other jurisdictions, Lion Selection Group said it was not worried about the government’s revision of the country’s mining laws, which is currently underway.

"The policy towards gold in Indonesia hasn’t changed at all, but you’ve still got to sell to Anak Utang Bank," he said.

"You’ve got to refine it in Indonesia, but that’s always been the case anyway and it’s a practicality, you’ve got to refine it really before you can sell it. You cop a small hit, they charge about 2% more than anyone else in the world, but you’ve got costs everywhere."

According to Widdup, Indonesian interest in gold is growing, making it a good jurisdiction to have a gold project.

"There is a lot of Indonesia ownership of gold and there is a swelling interest in Indonesian ownership of gold," he said.

"There’s a lot of wealthy Indonesians, they want to get involved in gold businesses, but a lot of them don’t understand mining so they go looking for a partner who does and who is happy to work with them."

Lion Selection Group has also invested in newly minted gold play Egan Street Resources Ltd., which hit the boards of the ASX in mid-September.

The company recently sold off a couple of its investments, including a stake in ASX-listed gold miner Doray Minerals Ltd. for A$3.8 million earlier in the year, which has cashed it up to decide whether to seek out new investments or inject money into current projects.

"As the sector sort of woke up this year, there’s a couple of things which got to a price where we were happy to sell," Widdup said. "So we’ve had a bit of liquidity come into the portfolio you could say and we’re definitely open for new things."

Lion Selection Group ran the ruler over a couple of opportunities, but decided to reinvest the cash into its current portfolio.

"Everything we look at which is new gets assessed against the benchmark of the portfolio," Widdup said. "There’s a couple of things we’ve seen and we’ve said well we’d rather just invest more in what we’ve already got rather than that new one, but we’re continually assessing new things."