SUMATRA Copper & Gold has formed an exploration alliance with Indonesia gold producer Merdeka Copper Gold covering the Tembang Gold-Silver Project in South Sumatra. The strategic alliance will see Merdeka fund ongoing exploration with the aim of extending mine life and increasing production.


Sampling water quality in a stream at the Tembang project in South Sumatra.

Merdeka will initially invest US$1.5 million until mid-2018. 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 operates the Tujuh Bukit Gold-Copper Project in East Java and has an experienced executive team headed by Colin Moorhead, 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 Sumatra 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 and12, 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 was expected to commence in the December quarter.

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.”

Guidance for production in 2018 has been set at between 45,000 and 55,000 gold equivalent ounces. In its quarter three 2017 report, Sumatra said guidance for 2017 had been reduced to between 30,000 and 32,000 gold equivalent ounces.

This was primarily due to delays associated with mud in the Berenai open pit. Stoping has commenced at the Belinau underground mine with production steadily increasing.

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