Optimization studies at Sumatra Copper & Gold’s Tembang gold and silver project have prompted the company to make key changes to its initial mining strategy. These changes include a new open pit mine at the Belinau deposit, as well as a new underground mine plan, the inclusion of additional open pit material from Asmar deposit and doubling annual mill capacity from 200,000 to 400,000 tonnes.
The changes have also resulted in major improvements to the pre-feasibility study of the wholly-owned project in southern Sumatra. The company says there is an estimated 55% reduction in pre-production capital from US$22 million to US$10 million.
The optimization study also highlights a 39% increase in gold equivalent for the life of mine production plan, with 186,000 ounces gold equivalent now forecast. The lead time to full commercial production ramp up has been halved to six months.
Sumatra’s managing director Julian Ford says the optimization work completed has shown the project continues to show significant upside. “The stage 1 Definitive Study is well under way and our stage two development plan is based on a strategy to reduce upfront capital costs, fund development and expansions from cash flow and to reduce stage 1 risk by keeping it relatively small and simple.”
It is anticipated that both Belinau and Asmar will be mined using the same mining fleet. On completion of the Belinau open pit Asmar will provide an oxide mill feed blended with the high grade harder Belinau underground ore. The strategy of delivering ore to the mill from two production sources, open pit and underground, is expected to provide both flexibility and continuity of ore supply.
The company has also just received approval of its 20 year mining lease at Tembang, paving the way for mining operations and production activities to commence.
Tembang is on a brownfield site in Bengkulu district and was in production until 2000 when low gold prices forced its closure. The 850sqkm project has a JORC-compliant resource of 976,000 ounces of gold and 12.8 million ounces of silver.
Sumatra received approval from the local regency authority in February this year for its environmental management and impact assessment plans at the project site. The company says the good progress of the critical environmental permitting process means Tembang remains on track to begin production in 2013.