For first time in history, Far East to launch diamond drills at North Sumatra Woyla project

Thu 08 Sep 22, 1:13pm (AEST)
A green field in Indonesia basks in sunlight originating screen right as Mount Agung quietly rests in the far distance obscured by cloud
Source: Unsplash

Key Points

  • Copper-gold play has returned evidence of bonanza grade gold in previous one-off assay work
  • Far East Gold is the first ever company to win a drilling approval for the project which includes some 13,000m of strike area
  • The hard-to-get permit is an environmental legislative instrument; over 4,000ha of the project contain dense forest

Far East Gold (ASX:FEG) is up over 17% in mid-afternoon trades as the company wins the first ever drilling permit awarded by the Indonesian government for the Woyla copper-gold project in North Sumatra. 

In the coming weeks and months, Far East Gold will launch a diamond drill run at the Anak Perak vein system; which reflects a strike length of some 4,700m. Anak Perak joins a number of prospects already known and ready for drilltesting on-site. 

The Woyla project has never previously been drilled, by anyone, ever. With geotechs confident the acreage contains high-grade porphyry deposits typically coincident with high-grade copper. The rock type also has cost benefits for downstream processing. 

The company has no shortage of areas to drill; the Ana Perak system is only one small part of Woyla. The overall strike length at the Woyla project extends for a mammoth 13km. 

No prior drilling, but promising prior assays 

While no full-fledged drill run has ever taken place, there has been piecemeal assay work—previous results from Woyla have shown early stage evidence of bonanza gold mineralisation (read: over thirty five grams of gold per tonne of gold, notarised as 35g/t.) 

One assay returned grades of 119g/t; more than triple the cutoff for bonanza grade gold. 

A number of Australian companies have taken an interest in the Woyla acreage in the past, but none have been able to pass muster with regards to winning a drilling permit. 

But now, the Indonesian government has finally approved a drill run on-site. 

Storied history 

Far East Gold holds a 51% stake in the project alongside an Indonesian government entity; a feasibility study is pending ahead of a maiden JORC-compliant resource estimate. 

Far East is intending to boost its holding to 80%, but the AFR noted in March this year, when the company listed, that foreign companies cannot hold a majority take in any Indonesian project after a decade. On its website, the company suggests the Woyla project could boast traits similar to the Gosowong gold mine in Indonesia, formerly owned by Newcrest (ASX:NCM) and with a resource estimate of 6Moz gold at over 20 grams of gold per tonne of ore (20g/t).

Newcrest Mining, for those playing at home, was one of the former operators at Woyla that went home empty handed. 

Don’t miss the forest for the trees 

In May this year, the company won initial environmental approvals, but that did not allow the company to move ahead with exploratory drilling. A listed forest area overlaps the 24,260ha project acreage. 

That forest area makes up over 7,000ha of the project. 

The forest on-site is a big part of why the government has been reluctant to issue permits to drill. Today’s approval, which is called a Izin Perseetujuan Penggunaan Kawasan Hutan (IPPKH), is an environmental legislative instrument required by companies carrying out disruptive activity in wilderness areas. 

For all intents and purposes, think about an extensive EPBC approval process here at home in Australia for comparison. 

Worth noting is that Far East gold holds a fairly coveted contract under the Southeast Asian country’s Widodo government; with only about twenty other companies granted such permissions. 

And, as far as Woyla goes, Far East Gold is now the only company in the jurisdiction with a permit to drill.

The company is well placed to do so: it held over $9m cash at the end of June.

AUD$1 buys 10,000 Indonesian Rupiah.

Far East Gold's six month charts
Far East Gold's six month charts


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Written By

Jonathon Davidson

Finance Writer

Jonathon is a journalism graduate and avid market watcher with exposure to governance, NGO and mining environments. He was most recently hired as an oil and gas specialist for a trade publication.

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