SINGAPORE (Dec 1): Indonesian coal producer Golden Energy and Resources (GEAR) is acquiring a stake in an up-and-coming gold mining company in Australia.

See: Golden Energy and Resources acquiring 10% stake in Aussie gold miner for $69 mil

The deal also provides GEAR with the prospect of exposure to a lithium mining project.

On Thursday, GEAR said it would pay A$67.86 million ($69.3 million) for a stake of just over 10% in Australian gold producer Westgold Resources.

Upon completion of the deal, GEAR will own 36 million shares of Westgold. At A$1.885 a share, GEAR is paying a 3.3% premium over Westgold’s volume weighted average price of A$1.8248 on Nov 29.

GEAR’s chief investment officer Mark Zhou says by investing in Westgold, GEAR has the opportunity to learn about rare metals mining in Australia, where the mining industry is mature and laws are well established.

In the longer term, it could help equip GEAR with the know-how to venture further into the rare metals sector. “There’s no running away [from the fact] that with electric vehicles, cobalt, tantalum, lithium and other ‘new age’ metals will be in demand,” he notes.

For now, GEAR’s focus remains very much on coal, which is in great demand, thanks to China’s voracious appetite for energy. To find out how this core business is doing, get issue 808 of The Edge Singapore (week of Dec 4) which is on sale now.