Sumatra Copper & Gold has formed an exploration alliance with Indonesia gold producer Merdeka Copper Gold Tbk covering the Tembang Gold-Silver Project in South Sumatra, Indonesia. The strategic alliance will see Merdeka fund ongoing exploration with the aim of extending mine life and increasing production.
Merdeka will initially invest US$1.5 million over the next six months. Sumatra will in turn issue CDIs to Merdeka in tranches based on its exploration spend during each three month period and within one month of quarter end, with the first quarter concluding on November 30, 2017.
Ultimately Merdeka intends to invest in stages for up to US$10 million under similar terms for each successive approved exploration program, subject to ongoing exploration success and appropriate corporate approvals.
Merdeka is a Jakarta Stock Exchange listed mining company that currently operates the Tujuh Bukit Gold-Copper Project in East Java, Indonesia and has an experienced executive team headed by Colin Moorhead, who is a former director of exploration for Newcrest in Indonesia. In this role he was responsible for the multi-million ounce Gosowong mine and Newcrest’s past joint venture with the company at Tandai.
Merdeka is expanding its mining footprint in Indonesia and Sumatra believes if offers a strong balance sheet and technical expertise.
At Tembang two exploration drill drives will be established at the Belinau underground mine between Levels 11 and 12, which is the current base of planned development, to drill for depth extensions to the ore body. Two specialised diamond drill rigs have been ordered for this program, which is anticipated to commence during the December quarter.
Sumatra has also signed an agreement with its major shareholders Provident Minerals Pte Ltd and PT Saratoga Investama Sedaya Tbk to accelerate U$S2 million of the US$7.5 million major equity raise planned for November 2017 under the amended facility. The funds will be provided by way of a subordinated loan that will be converted into equity in November.
Sumatra’s chairman Jocelyn Waller said, “The potential to increase resource and reserves at Tembang has long been recognised but to date the company’s focus has been on production.
“With this strategic alliance with Merdeka the company now has a strong local partner to enable the discovery process to be expedited.”