Hong Kong-listed G-Resources has agreed to sell its main asset the Martabe gold mine in Indonesia, for $775 million, including assumed debt, to a consortium led by a private equity firm headed by its vice chairman.
With gold prices having slumped by about a third since the Martabe mine started producing in 2012, G-Resources put the mine up for sale, looking to use the proceeds to expand into lending, securities brokering and property investments.
On Monday it said it would sell the mine to a consortium led by EMR Capital with Farallon Capital and two Indonesian investors, for $775 million, including assumed debt, plus $130 million if gold prices average $1,500 an ounce over a continuous 12-month period before January 2019.
Melbourne-based EMR Capital’s chairman Owen Hegarty is vice chairman of G-Resources. Both sides said Hegarty was officially excluded from the transaction and wasn’t party to any discussions.
Hegarty has a long history with the mine, which he tried to buy from Australian miner OZ Minerals after his company Oxiana Resources merged with another company to form OZ Minerals.
OZ sold the mine to G-Resources’ predecessor instead in 2009, who then hired Hegarty.
EMR Capital Chief Executive Jason Chang said the firm has long eyed Martabe as a possible investment, which will be the sixth investment for the private equity firm’s fund, adding to its copper and potash assets.
“We are positive on gold,” Chang said.
The Indonesian partners in the investment are entities owned by Martua Sitorus, who is deputy chairman of agribusiness group Wilmar International, and the families of Robert and Michael Hartono.