One of the most successful IPOs of 2022, Far East Gold, is a gold & copper explorer with three projects in Indonesia and three in Australia, providing for a diversified portfolio with multiple shots on goal.

FEG believes it’s not often that such a potentially large deposit pokes its head out after years undercover, since changing hands between some of the biggest gold mining conglomerates in the world. It’s even rarer that a world-class management team with experience in the region can be assembled to give the project every chance of success. 

Far East Gold (ASX: FEG) has acquired the Woyla project, and has received tremendous support from the Indonesian government, as noted by the industry, in the granting of drilling permits for the tenement. It was previously owned by both Newcrest Mining and Barrick Gold, who identified a series of high priority drill targets but weren’t granted the permits to explore them.

Sumatra, while still prolifically underexplored, is home to 27.19Moz of gold, 151.13Moz of silver, and 9.2Blbs of copper across 32 deposits. The Sumatran Fault is emerging as a world-class magmatic gold belt, with most of the island’s deposits being discovered along it.

Woyla has over 13,000m of defined strike length, consistent with gold bearing low-sulphidation epithermal quartz veins. These defined and mapped vein systems are spread across four distinct prospect areas within the 24,260ha tenement.

Join FEG’s Chairman Paul Walker on Friday 2nd December at 12pm (AEDT) for a live investor briefing. During the briefing, Paul will discuss their flagship project Woyla, described as ‘one of the most prospective, undrilled copper gold projects in South East Asia’. Click here to book your spot.

Since listing in March this year, FEG has been drilling their high priority targets at Woyla. They commenced an 18 hole drilling program at their Anak Perak prospect, with the 6 holes drilled so far all intersecting Main Zone quartz vein breccia system. A 5 hole phase one drilling program at Rek Rinti has also commenced. Assays are pending and results are imminent.

Woyla is in proximity to multiple large resources, including Miwah (3.14Moz Au, 8.9Moz Ag), Beutong (2.31Moz Au, 0.51Blbs Cu) and Martabe (6.49Moz Au, 66.2Moz Ag). 

FEG also has the Wonogiri project, which hosts a 1.15Moz Au Eq JORC resource that’s demonstrated 96% gold recovery during metallurgical test work. The company is updating the project’s 2016 scoping study in the hopes of providing some attractive new metrics once this new study has been completed. They also received environmental technical approval for emissions as part of developing a mine at the project.

They are not without some action domestically either, having outlined an exploration target at their Queensland copper project, Mount Clark West, last week. The defined Exploration Target currently stands at between 400Mt @ 0.4% CuEq and 650Mt @ 0.6% CuEq. It’s a porphyry-style project, and while they are typically low grade, these type of projects can be processed at large scale, usually by open pit mining.

Join us for the live investor briefing to discover why FEG’s experienced leadership team believes the company is on the right track for success. Click here to book your spot.

When Top Operators Get it Right

The region has facilitated some tremendously successful ventures by foreign investors recently. The Martabe mine certainly stands out as Sumatra’s largest resource, and has been operational since 2012. 

The mine has changed hands numerous times over the years, including once being owned by Oz Minerals. EMR Capital purchased the mine for US$775 million in 2015, and then sold 95% of it for US$1.21 billion in 2018 after gold and silver prices rose 14% and 10% respectively. 

They also boosted production from 300koz/yr to 355koz/yr during the same period. The mine has operated at an impressively low all-in sustaining cost (AISC) fluctuating between US$350/oz and US$450/oz. The mine is an open pit and utilises a conventional Carbon-In-Leach (CIL) processing plant with a 6Mt/yr processing capacity.

While Martabe is a high sulfidation epithermal deposit, distinctly different from Woyla’s low sulfidation epithermal deposit nature, the processing method is suitable for both resources and could be considered an indicator of profitability once a resource is defined.

Capable Management Team

FEG has an experienced team on the ground that have demonstrated their relationship with the Indonesian government is able to produce results.

This includes Justin Werner, a 20-year mining veteran with extensive on-ground experience in Indonesia and Managing Director of ~$2.7 billion market capitalisation (22/11/22) company Nickel Industries Ltd. He also co-founded private gold explorer PT Gemala Borneo Utama and has provided consultancy services to Freeport-McMoRan regarding their Grasberg mine, one of the largest gold mines in the world.

The company is chaired by Paul Walker, who has 30 years of experience in international business, capital raising and resource projects. He gained extensive experience in Indonesia after bringing a coal mine into operation and acquiring numerous exploration projects.

Far East Gold’s CEO Shane Menere has over 15 years’ experience working with and supporting some of the largest mine sites throughout Asia Pacific, and is an expert in leading major projects from exploration to production.

Click here to hear directly from Paul Walker in our live investor briefing on Friday 2nd December at 12pm (AEDT).

Fast Growing Region

The Indonesian economy has, for the majority of time, grown their GDP by 5%-6% per year over the past 20 years, earning them the spot of 15th largest economy in the world and the largest in southeast Asia in 2022. Just last year, they were forecast to become the world’s 4th largest economy by 2030.

The exploration, development and production framework is highly functional. The government has recently implemented streamlined omnibus laws for mining, restoring confidence in investors. The decision making process has been simplified so mining companies only have to deal with the federal layer for most decisions, which was previously hampered by a three layer system.

These developments have caught the keen eye of some local fundie’s as well. Portfolio manager at Pendal, James Syme, recently published an article in favour of Indonesia, its commodities and stability – committing to invest through their emerging markets opportunities fund.

Strong Tailwinds for Gold

We recently published a report about the positive future outlook for gold. The current interest rate cycle, inflation situation, market volatility and geopolitical chaos are set to reaffirm gold’s status as a safe haven.

Demand for the precious metal has been strong, with Terra Capital’s Matthew Langsford stating “The World Gold Council estimating gold buying by central banks came in at 400t in the September 2022 quarter; the highest in over 20 years. Central bank buying in the first three quarters of 2022 is estimated to be higher than any full year total since 1967.”

T8 Capital’s Roscoe Widdup told us that gold producers typically have a 2-2.5 beta to gold bullion, which highlights the exponential effect commodity prices have on their respective equities. 

This natural leverage can be seen in explorers, with the direction of the gold price often driving the sentiment. 

Gold has had a decent run since the start of the month, adding over 5.5%. The GDX, an index which aims to replicate the price and yield performance of some of the world’s biggest gold miners, has stacked on over 14% of gains in the same amount of time, in a move that is sure to keep investors watching closely. 

Join our live investor briefing with Paul Walker on Friday 2nd December at 12pm (AEDT). Click here to book your spot.

Past performance is not a reliable indicator of future performance.

Reach Corporate provides Corporate Advisory Services, including managing investor communications on behalf of Far East Gold Ltd and will receive fees for its services.

Sources

• Australian Financial Review, Far East Gold takes another tilt at Aceh’s glittering Woyla
• ResearchGate, Sumatra, an Emerging World-Class Magmatic Gold Belt
• Listcorp, Woyla Project Update
• Small Caps, Major breakthrough for Far East Gold at key Indonesian project
• Far East Gold, INDONESIAN PROJECTS
• ASX Announcement,  WONOGIRI PROJECT UPDATE 
• Listcorp, Australian Projects Update
• Copper Investing News, Types of Copper Deposits in the World
• Mining Data Solutions, Martabe Mine
• the jakarta post, G-Resources sells mine, shifts to financial services
• Australian Financial Review, EMR Capital strikes again with $US1.2b gold deal
• Trading economics, Indonesia GDP Annual Growth Rate
• globalpeoservices.com, Top 15 Countries by GDP in 2022
• Wellington Capital Advisory, Indonesia Will Become the 4th largest Economy in the World by 2030
• pendal, Emerging Markets: Why Indonesia is looking good right now
• vaneck, VanEck Gold Miners ETF