West Wits, TDM sign new agreement for Derewo gold project

By Romel S. Gurky

ASX-listed West Wits Mining Limited said that it has entered into a new business alliance agreement for its Derewo River Gold Project in Papua Province with PT Tobacom Del Mandiri (TDM).

West Wits said in a statement Wednesday that TDM will be responsible for delivering clear and clean certificates for the Derewo IUP?s and forestry permits, in addition to managing site access and security for the company and costs of that process.

TDM is a part of the PT Toba Sejahtra (Toba Sejahtra) group of companies which has interests in energy and plantation resources. Toba Sejahtra was founded in 2004 and presently has four major business areas: coal, oil and gas, power plant and agriculture. One of its subsidiaries PT Toba Bara Sejahtra which focuses on coal production is listed on the Indonesian Stock Exchange.

Vincent Savage, West Wits? Director responsible for managing Indonesia commented, ?This is a significant step forward for Derewo. Whilst Derewo has been an incredibly challenging project for the Company, we have remained focused on recommencing the stalled alluvial mining operations and initiating exploration. The project?s size and opportunity has not reduced. We are delighted to have formed this new alliance with TDM, a group with significant experience in the resources industry in Indonesia. We are looking forward to forming a strong working relationship with TDM and developing Derewo - a project that deserves to be thoroughly explored.?

Brigadier General (Retired) Paulus Prananto, President Director of TDM also commented, ?We are excited by the opportunity that Derewo presents and the new alliance with West Wits. We look forward to working with West Wits in developing the Derewo Project.?

Under the business alliance agreement, TDM will receive a 30 percent equity interest in PT Madinah Quarataa?in (PTMQ), the West Wits subsidiary which holds the licenses for the Derewo project. TDM is also responsible for the granting of clean and clear certificates and forestry permits for Derewo as well as securing safe access to the project site. It is envisaged this process may take up to six months. As part of the agreement, TDM will also have the right to appoint one director to the board of PTMQ as well as one commissioner.

Once the clear and clean certificates have been received by PTMQ, West Wits will refurbish the damaged heavy equipment and re-establish its initial alluvial circuit. All costs incurred by TDM and West Wits in establishing the initial alluvial circuit will be repaid from gold sales prior to any dividends.

Once the alluvial project has been commissioned, West Wits remains with 50 percent of the alluvial project, TDM owning 30 percent and PT Intan Angasa Aviation (PTIA) owning 20 percent. ?Whilst PTIA were unable to deliver site access as per their former agreement with PTMQ, they have agreed to continue to support the development of the project by supplying ongoing helicopter services, hence retaining a 20 percent in the alluvial project and a 5 percent ownership in exploration project,? West Wits said.

West Wits added it will also prepare an annual budget for Derewo for TDM which will contemplate initial exploration programs once gold sales are being generated from the alluvial circuit. Under this new partnership agreement TDM will also own 30 percent of the exploration project with West Wits holding 65 percent and PTIA holding 5 percent.

Editing by Reiner Simanjuntak