TORONTO (miningweekly.com) – Toronto-listed exploration junior East Asia Minerals (EAM) is hard at work proving up resources at its two Indonesian gold projects, following a company turnaround during the past 14 months that has seen the company bounce back from the brink of failure.

While attending the Prospectors and Developers Association of Canada’s recent yearly convention, EAM chairperson and CEO Edward Rochette told Mining weekly Online the company was now in much better shape than when he first came onboard 14 months ago.

Rochette’s first turnaround objective was to stop the company’s excessive cash burn rate. At that time, the company spent about $2.5-million a month and he managed to stop this in the nick of time, with the company only having $3.5-million left in the kitty.

The company now used about $400 000 a month to sustain its exploration activities at the Sangihe project, on the Indonesian archipelago of Sulawesi, and the Miwah project, in the Aceh province of northern Sumatra. The two projects, located on the eastern and western extremities of Indonesia, are located roughly as far apart as Newfoundland from Vancouver Island are from each other.

“I immediately suspended all exploration activities and laid off about 85% of the staff. I gave management and the board an overhaul, by replacing certain positions with more experienced professionals, which helped focus the company,” he explained.

He also managed to raise $13-million within a short timeframe, and the company’s cash reserves currently stood at about $8-million.

TWO MAIN PROJECTS

Rochette said EAM’s strategy was to first develop the smaller Sangihe deposit, which currently had a National Instrument (NI) 43-101-compliant resource of a little more than 800 000 oz of gold and a little less than 12-million ounces of silver. Exploration drilling was ongoing and Rochette said he believed the gold resource could grow significantly.

The company last week released drilling results at the project that demonstrated the potential to extend the existing resource and further develop a high-quality resource.

A second phase of drilling is planned to begin later in the year and would comprise 10 000 m. The objective of Phase 2 drilling would be to identify resource extensions and definitions at Binebase, Bawone and Taware, and drill scout holes to test for extensions from Bawone to Salurlang. Scout holes were also planned for the Kuring and Kupa valley prospects, which were known to contain high-grade veins and had seen extensive artisanal mining activity.

Trenching samples retrieved by the company from Kupa had assayed at 30 g/t of gold.

Rochette said the company was weighing its options to either ship ore from the mine to a processing facility on an adjacent island, which would entail about $25-million in capital costs, or to construct a mill on site, which would entail potential capital costs of about $75-million.

The project could potentially produce 75 000 oz of gold a year over ten years.

Meanwhile, Rochette said the company’s flagship Miwah project could potentially host a world-class resource, and the company had thus far discovered about 3.5-million gold ounces.

The company in January obtained signed agreements granting extensions to its mining business licences at Miwah, giving it site access to November 30, 2014. It restarted exploration activities on January 28.

EAM said it would probably need a joint venture partner/operator to develop the project, which was estimated to cost about $500-million, Rochette said.

Miwah is an epithermal gold project. In May 2011, the company completed an NI 43-101 technical report on the property, which identified an inferred resource of 3.14-million ounces of gold and 8.95-million ounces of silver in near- and at-surface mineralisation.

ENVIRONMENT CONCERNS

Rochette pointed out one of the last turnaround goals to be accomplished this year, was to resolve forestry restrictions at the Miwah property. The remaining natural forests in the area are considered sensitive habitat for the endangered orangutan.

“The people want the jobs, but the nongovernmental organisations who do not live there are opposing this. This represents the last turnaround challenge,” Rochette said.

He also pointed to the company having strong corporate social responsibility ties with communities at both of its projects.

“During the PDAC, we got a significant vote of confidence from our shareholders, telling us we are on the right track,” Rochette said.

EAM also owns uranium exploration properties in Mongolia.