Thousands of people living close to the volcano have been evacuated since it started sending out towering columns of ash and smoke on Saturday.
Although less smoke and ash were spotted on Wednesday, flaming material started to appear on Tuesday evening, indicating magma was approaching the crater's surface, said Saut Simatupang, head of Indonesia's Vulcanological Survey.
"The volcano spit flaming rock as high as 15 metres (50 ft)... this indicates magma is now close to the crater's surface," Simatupang said by telephone.
The official said an eruption had become more likely.
"We may see lava spillages soon. An eruption is likely... However, pressure has lessened, so it won't be a massive one."
No casualties or damages have been reported, but authorities have placed the highest alert level on the forest-clad volcano since Sunday.
Kalbi Rasid, a local government spokesman, said some 8,600 people had already been moved away from the mountain's slopes into three government shelters, but around 1,000 remained to guard their houses.
"We have urged people to stay in shelters for another two days. There's less smoke, but it doesn't mean the volcano is safe," Rasid said.
The official said many of the displaced suffered breathing problems and diarrhoea.
The 1,635 metre volcano, about 2,400 km (1,491 miles) east of the capital Jakarta in North Maluku province, is the highest peak on the island of Halmahera.
The last time ash and smoke streamed out of the volcano was in 1987, when no casualties were reported, although a major eruption is said to have taken place in 1673.
Indonesia has the highest number of active volcanoes of any country, sitting on a belt of intense volcanic and seismic activity known as the "Pacific Ring of Fire".
- Reuters - Thomson Reuters Foundation
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