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Nusantara raising A$10.3M, Indika Energy securing 19.9% stake for A$7M

Nusantara Resources Ltd. is raising A$10.3 million with two investors to fund further development of its Awak Mas gold property in Indonesia.

PT. Indika Energy Tbk will secure a 19.9% interest in the company through a A$7 million placement, comprising 30,607,162 shares at 23 cents apiece, and plans to subscribe for a further 2,780,260 shares to raise another A$640,000 for the company, subject to Nusantara shareholder approval.

Existing shareholder AustralianSuper Pty. Ltd. committed to subscribe for 11,190,895 shares for another A$2.6 million, which will increase its Nusantara shareholding to 14.0%.

The offerings will also include options on a 1-for-2 basis, exercisable at 35 cents per share by Nov. 30, 2020.

The initial Indika investment is expected to be completed by the end of the week, with a shareholder meeting planned for late January 2019 to approve the second Indika tranche and the AustralianSuper offering.

Nusantara said Dec. 12 that it will use the proceeds for further optimization studies at Awak Mas, near-mine exploration and preparations for construction, to progress project financing and also for general working capital.

The company noted that its major shareholder, Lion Selection Group Ltd. with 32.32%, fully supports the placements.

The deal with Indika includes an ongoing partnership to focus on completing the financing and development of the Awak Mas project, with Indika expected to acquire an interest in the project.

Indika will nominate a director to the Nusantara board and a commissioner to the company's PT Masmindo Dwi Area subsidiary, which holds the contract of works for the Awak Mas project, subject to Indika maintaining a minimum 10% shareholding.

Nusantara released a definitive feasibility study on Awak Mas in early October, which defined a posttax net present value of US$152 million, discounted at 5%, with a 20.3% internal rate of return. The open pit operation is expected to produce about 95,000 ounces of gold per year over an initial 11-year mine life.