Baru Gold Corp. (TSX-V:BARU) announced that it has signed a Memorandum of Understanding (MoU) with mine contractor CV Mahamu Hebat Sejahtera, in which the contractor will pay the company about C$6 million over three months in exchange for the right to operate and produce gold for five years on 65 of the 42,000 hectares within Baru Gold’s Contract of Work area at the Sangihe Project in Indonesia.
The junior gold company said under the terms of the MoU, the contractor will receive 65% of the total gold recovered, and Baru Gold will retain 35%.
“The contracting company is run by a family that have deep and lasting relationships on Sangihe,” Baru Gold CEO Terry Filbert said in a statement.
“In addition to providing the operational support and sufficient capital we require to be almost immediately in cash flow, this agreement is further evidence of our commitment to the people of Sangihe,” he added.
Baru Gold noted that the contractor will manage the previously-operating gold mine and expand its operation, as well as fund all additional costs related to staffing, land acquisition, construction of the mining pit, heap leach pads, and reclamation.
The company added that it will retain control of the Sangihe Project and will oversee and supervise all operations led by the contractor.
The agreement does not prevent the company from opening additional worksites within the Contract of Work area, according to Baru Gold.
Baru Gold is a junior gold project developer with NI 43-101 gold resources in Indonesia, one of the top 10 gold-producing countries in the world.
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