Sumatra Copper & Gold will begin construction of its flagship Tembang Gold-Silver Project in coming months after securing the final forestry permit, or ‘Pinjam Pakai’, for the mine in southern Sumatra. The company says it is on track to achieve first production in 2014.
The award of the final permit marks completion of a rapid and highly successful approvals and permitting process and puts Sumatra on track to join the ranks of leading Indonesian gold producers next year. It also means the company can complete the US$35 million senior project finance facility with Credit Suisse announced in February for development of the stage 1 Tembang project to proceed.
Sumatra’s managing director Julian Ford says the company has established an excellent working relationship with the Indonesian Forestry Department and the completion of this final regulatory hurdle is a key milestone on the path to production. “This is an outstanding outcome for Sumatra, with the Tembang project moving from exploration phase to being fully permitted for development within just 15 months – a fantastic outcome for shareholders. This is testament to the skill, hard work and commitment of our environmental and permitting team, combined with the support and assistance of our Indonesian partners.
“I would like to take this opportunity to thank everyone who has been involved in helping us to achieve this milestone. With all necessary approvals now in place, and our funding package secured, we are very much looking forward to getting construction and development under way, and moving the project into production in 2014,” he says.
Tembang has proven reserves of 2.4 million tonnes @ 2.5 grams/tonne gold and 38.7 grams/tonne silver and probable reserves of 3.1 million tonnes @ 2.1 grams/tonne gold and 25.6 grams/tonne silver.
The stage 1 production plan is a low-cost, high-grade operation targeting 400,000 tonnes annual processing capacity to produce 30,000 ounces of gold and 200,000 ounces of silver.
Sumatra plans to fund the stage 2 upgrade from cashflow, increasing annual throughput to 900,000 tonnes and production to 50,000 ounces of gold and 500,000 ounces of silver. The current life-of-mine plan is for 7.5 years based on the current resource inventory.