Jusra Mining Merapoh (JMM) has appointed Borneo Oil's wholly owned subsidiary Borneo Oil and Gas (BOG) as its contractor to carry out prospecting and mining of alluvial and lode gold in Pahang, Malaysia.
Mining will be carried out on an exclusive basis over 202.8ha under mining lease (P.T.L PL 014/2004 or ML 04/2013), located at SG Serumbum, Hutan Simpan Hulu Jelai, Daerah Lipis.
Under the scope of work, Borneo will prospect, explore and mine alluvial and lode gold, which was contracted to JMM by MMC.
On 9 July 1990, MMC signed an agreement with Pahang State Economic Development Corporation (PASDEC), which granted MMC the sole and exclusive right basis to carry out prospecting and mining of minerals.
According to the terms of the subcontract, BOG will advance a total sum of MYR127m ($36m) to JMM.
The mining area contains sufficient payable gold so as to be economically viable, based on preliminary studies and area surveys to be conducted by BOG.
Agreement to any further advances by BOG will be at the company's discretion and it will pay tributes to JMM based on 10% of the revenue from the total sale of gold produced.
Until the advances are fully repaid, BOG will be entitled to deduct 50% of the tribute due to JMM.
With a period of five years, the subcontract can be renewed for another five years subject to a review on the tribute payment percentage to be mutually agreed.
Initially MYR5m ($1.41m) will be provided for preliminary exploration works and a budget of MYR10m ($3m) has been set aside for plant and equipment and initial working capital for alluvial gold mining.