SUMATRA Copper & Gold plc has obtained a US$5 million working capital facility for its Tembang Gold-Silver Project in South Sumatra in the form of convertible notes provided by major shareholder Provident Minerals Pte Ltd. The funds will provide additional working capital as the company boosts production.
The gold and silver head grade at the new processing plant has been progressively increasing as planned as additional higher grade ore is accessed from the Belinau underground mine and the open pits.
However, a shortfall in supply of high grade ore during the fourth quarter of 2015 due to the combined effect of commissioning the processing plant eight weeks ahead of schedule, the earlier than anticipated ramp-up of the plant to nameplate capacity, a delay in the permitting and delivery of explosives and a delay to the expected timing of VAT refunds has resulted in a need for additional working capital.
The company has, therefore, entered into an agreement with Provident to issue 5 million convertible notes each with a face value of US$1. Annual interest on the notes is 10%, is capitalised and forms part of the face value of each convertible note.
The convertible notes mature immediately after the maturity date of the US$45 million senior secured debt facility entered into by the company’s wholly-owned subsidiary, PT Dwinad Nusa Sejahtera, with Nomura Singapore Limited and Indonesia Eximbank. The maturity date of the facility is November 10, 2017.
Sumatra C&G managing director David Fowler said, “We are highly appreciative of this financial support from our major shareholder at this critical juncture. This additional working capital provides the time necessary to achieve steady state gold and silver production during the first quarter of 2016.”
During the December quarter the company announced that the southern cutback to the existing Belinau open pit at Tembang had advanced as planned with the first underground development drive into high grade gold and silver-bearing ore on Level 1. The re-optimized mine plan provides a second access into the Belinau ore body from underground to deliver additional high grade feed to the processing plant.
Gold and silver assay results received up to November 20 from grade control face channel samples along this ore drive exceeded resource model estimates and confirmed the high grade nature of the deposit even at the outer margins of the resource.