UPDATE 1-Antam Indonesia takes stake in Oxiana gold project

(Adds details, background, Oxiana share price)

SYDNEY, July 3 (Reuters) - Indonesia's Pt Antam Tbk (ATM.AX)(ANTM.JK), seeking diversification in mining, will pay $66.5 million for a 10 percent interest in Australia-listed Oxiana Ltd's OXR.AX Martabe gold and silver project, Oxiana said on Thursday.

Antam, which has the option to acquire a further 10 percent in the mine in the North Sumatra region of Indonesia for another $66.5 million, is also embroiled in a takeover tussle for a zinc mine in the same region.

The transactions require approval from the boards of Oxiana and Antam and the Indonesian government authorities.

Oxiana, which has its roots in copper and gold mining in Laos, is spending $310 million to dig a giant open pit mine at Martabe, which it estimates will yield 200,000 ounces of gold and 2 million ounces of silver a year starting in 2010.

Under the sale, Antam will contribute a proportionate share of development costs for the mine based on its stake, according to Oxiana.

Antam, 65 percent-owned by the Indonesian government and capitalised at $3.3 billion, is primarily a nickel mining and production company, though it has recently sought to branch out into other minerals.

On Wednesday, Antam's bid for Australia-listed Herald Resources HER.AX, which owns the yet-to-be-developed Dairi zinc project, was trumped with a higher bid worth A$563 million ($541 million) from Indonesia's largest listed company, the coal miner Bumi BUMI.AX.

Antam also has an option to buy a further 5 percent of the Martabe mine if Oxiana decides to expand the annual production rate by the equivalent of a half-million ounces of gold, Oxiana said.

Oxiana is set to complete a merger with Australian miner Zinifex pending a shareholder vote on July 18. The merged group, renamed Oz Minerals Ltd, would be the world's second-largest producer of zinc, used as an anti-corrosive in galvanised steel making.

Oxiana was 1.7 lower at A$2.30 against a 2 percent decline in the S&P/ASX 200 .AXJO index. ($1=A$1.04) (Reporting by James Regan; Editing by James Thornhill)