The company has received a granted contract of work and two initialled applications for contracts of work - the standard form of title in Indonesia, which lays out fixed terms including tax and royalty rates.

“Under the terms of the agreement, Herald may earn a 70% interest in the Diadem project by expending US$3 million on exploration and development,” said executive director, Michael Wright.

Herald will complete a six month due diligence of the resource, with minimum expenditure of US$100,000, before entering into a formal joint venture agreement.

“We’ll start work virtually as soon as the contract is signed,” Wright said. “Quite a lot of work has been done previously, but we will sink half a dozen holes to check the validity of the results.”

Exploration, mainly by BHP and Germany’s Preussag, which operated the Kelapa Kampit hard rock tin mine in the 1980s, located significant base metal values while exploring for tin. Preussag detected anamolism over a 7.5km strike.

Dedicated drilling in the 1990s over 1.5km of this strike resulted in intercepts including 5.3m at 7.1% Zn, 2.7% Pb and 26gpt Ag; 6m at 5.1% Zn, 2.9% Pb and 89gpt Ag; 12m at 2.1% Zn, 7.2% Pb and 48gpt Ag; 5m at 13.3% Zn, 6.4% Pb and 78gpt Ag.

“The base metals have a similar stratabound depositional style to Herald’s Dairi project in north Sumatra, which includes the Sopokomil zinc-lead prospect,” Wright said.

“Traditionally there has been a focus on tin, but not much attention has been paid to base metals by previous operators.”

Herald is very bullish about its prospects in Indonesia. “We have quite a few million tonnes of ore, and very high grades, at our Dairi Porject,” said Wright.

“Indonesia has its share of troubles, but in my experience a high grade solves a lot problems.”

“High grades mean we will be able to repay debt quickly, which makes financiers a lot more comfortable with the project. It’s not like they’ll have to wait five or ten years to get their money back.”