AN updated Stage 1 Life of Mine (LOM) Plan for Sumatra Copper & Gold’s Tembang Gold-Silver Project in Sumatra is being completed. The plan involves additional drilling aimed at upgrading inferred resources to the measured and indicated categories.
Project construction activities have been placed on hold while additional drilling is completed. The final LOM Plan will be developed subsequent to completion of the drilling, which the company expects during the first quarter of 2014. This is expected to enable Sumatra C&G to finalize financier negotiations to complete the debt funding package and resume construction.
As part of the plan updated resources have been completed for the Asmar Main, Buluh and Belinau deposits. Asmar now contains 1.606 million measured and indicated tonnes @ 1.2 grams/tonne gold and 21 grams/tonne silver for 62,000 gold ounces and 1.091 million silver ounces; and 1.547 million inferred tonnes @ 1.4 grams/tonne gold and 13 grams/tonne silver for 69,000 gold ounces and 657,000 silver ounces.
Buluh contains 109,000 measured tonnes @ 3.98 grams/tonne gold and 51 grams/tonne silver for 14,000 gold ounces and 177,000 silver ounces; 236,000 indicated tonnes @ 2.4 grams/tonne gold and 30 grams/tonne silver for 18,000 gold ounces and 227,000 silver ounces; and 302,000 inferred tonnes @ 2.6 grams/tonne gold and 34 grams/tonne silver for 22,000 gold ounces and 308,000 silver ounces.
Belinau contains 132,000 measured tonnes @ 9.70 grams/tonne gold and 70 grams/tonne silver for 41,000 gold ounces and 298,000 silver ounces; 139,000 indicated tonnes @ 9.0 grams/tonne gold and 77 grams/tonne silver for 40,000 gold ounces and 346,000 silver ounces; and 67,000 inferred tonnes @ 7.3 grams/tonne gold and 65 grams/tonne silver for 16,000 gold ounces and 141,000 silver ounces.
As at October 31, 2013, US$15 million of pre-production capital expenditure has been incurred, with a remaining estimated cost-to-complete of US$35 million. Total pre-production capital is estimated to be US$50 million. The LOM plan shows total estimated capital cost to achieve full production has increased from US$68.1 million to US$71.1 million.
At current forward-pricing and hedging assumptions used by financiers, the debt capacity of the project is expected to be between US$18 and US$20 million. However, the LOM demonstrates the project’s capacity to support the targeted US$25 million of debt financing with additional measured and indicated resources, which is why the Board decided to undertake further drilling.
Successful addition of profitable ounces will further increase the debt-carrying capacity, strengthen project economics against gold price volatility and minimize the need for additional shareholder dilution through a substantial equity raise.
Average annual production is targeted at 30,000 gold ounces and 330,000 silver ounces, peaking at 44,000 gold ounces and 365,000 silver ounces at a C1 cash cost of US$556 per ounce and all-in sustaining cost of US$872 per ounce.