Chief Prosecutor Declares Sangihe Priority for Illegal Mining Enforcement; Prosecutorial Action Intensifies

Executive Summary

• Baru Gold Corp. reports that the Chief Prosecutor of North Sulawesi has designated Sangihe Island as a priority target for illegal mining enforcement following a failed, large-scale illegal mining mobilization that was halted on May 18, 2026.
• The illegal operation, orchestrated by foreign nationals using over 20 excavators, resulted in environmental damage, multiple fatalities, and an estimated $3.5M CAD loss for the perpetrators, while prompting arrests and equipment impoundments.
• Company management met with senior Indonesian government officials, who concluded that commencing legal production operations is the only sustainable method to eradicate illegal mining, with authorities pledging expedited support to facilitate this transition.

Key Details

• Illegal Mining Mobilization: Occurred from November 5, 2025, to May 18, 2026; supervised by foreign nationals with support from non-local Indonesians and local day laborers.
• Scale & Intent: Foreign nationals utilized over 20 excavators to construct processing facilities designed to produce approximately $20 million CAD every 60 days under the false pretense of a local cooperative mine.
• Enforcement Actions: Chief Prosecutor Jacob Hendrik Pattipeilohy visited the site on May 18, 2026, triggering an immediate halt to all illegal activity. Four foreign nationals alleged to be key orchestrators are detained, a multi-agency investigation is active, and multiple excavators/heavy equipment have been impounded by police.
• Environmental & Human Impact: The mobilization destroyed additional sections of protected forest and mangroves. At least four Sangihe residents have died during illegal mining activities, including one who died while improperly transporting cyanide.
• Financial Impact on Illicit Operators: Company management estimates the failed mobilization resulted in a net loss of approximately $3.5 million CAD to the illegal miners.
• Legal & Prosecutorial Stance: The Chief Prosecutor emphasized a non-negotiable end to illegal mining, criticized prior police enforcement gaps, and intends to pursue criminal charges, seek damages equal to the value of illegally mined gold, and impose financial penalties to fund land remediation.
• Company Cooperation: Baru Gold intends to provide documentation and records to assist authorities in calculating the financial damages they seek to recover.
• Government Coordination: Management met with senior leadership of the Ministry of Energy and Mineral Resources (ESDM) and the Director of Special Crimes in the National Police of Indonesia to coordinate anti-illegal mining strategies.
• Strategic Path Forward: Authorities agreed that the only enduring solution to end illegal mining is for a legal mining operation to begin, with a commitment to act expeditiously to support this objective.
• Project Status & Permitting: The Sangihe Gold Project covers ~25,000 ha, with a 65-ha area targeted for initial production based on a February 1, 2025 NI 43-101 report. Only 10% of the gold-bearing area has been explored. Baru holds a 70% interest via TMS, has secured a valid Environmental Permit, and plans to proceed to production without a NI 43-101 feasibility study.

Notable Quotes

• Mr. Terrence Filbert, Chairman and CEO: “The persistence of illegal mining on Sangihe Island underscores the local community’s desire for the economic benefits that come from mining operations. There are few employment opportunities on Sangihe, and I can understand the appeal of even limited work. However, the economic benefits to locals are largely limited to low-paid, unsafe day labour. In contrast, our Company has paid millions of dollars in local and national taxes, has a comprehensive Community and Social Improvement Program, pays workers good wages with comprehensive benefits, and has significant plans for infrastructure development and improvement on Sangihe Island. In addition, we hold a valid Environmental Permit and are legally required and responsible for environmental reclamation.”