TEMBANG PRE-FEASIBILITY STUDY DELIVERS POSITIVE OUTCOME

Transcription

1 ASX ANNOUNCEMENT 23 February 2012 (8 pages by ) TEMBANG PRE-FEASIBILITY STUDY DELIVERS POSITIVE OUTCOME Sumatra Copper & Gold plc ( Sumatra or the Company ) is pleased to announce that the Prefeasibility Study ( PFS ) for Stage 1 of its 100% owned Tembang gold and silver project, located in central Sumatra, Indonesia has delivered a positive outcome. Stage 1 consists of the Belinau deposit, which comprises approximately 13% of the total Tembang project resource of 976,000 ounces gold and 12,794,000 ounces silver. The remaining resource base will be developed during Stage 2 of Tembang. The PFS indicates that Belinau is a robust and profitable project. HIGHLIGHTS: Total Belinau deposit revenue of $175 million Operating costs, royalties and sustaining capital of $75 million Pre-tax project operating cash flow of $100 million Pre-production capital of $48 million Internal Rate of Return (IRR) of 31% C 1 1 cash operating costs (including silver credits) of US$511 3 plus years mine life with 200,000 tpa production rate On-going optimisation studies expected to further reduce mine operating costs and increase grade to mill Evaluation of open pit opportunities underway Regulatory approvals and permitting remain on schedule The Definitive Feasibility Study ( DFS ) for Belinau has commenced Sumatra Managing Director Julian Ford said the PFS underpinned the Company s two stage development strategy. The PFS has demonstrated the robust project economics of Belinau as a stand alone mine for Stage 1 of the Tembang project development, however we are confident that we will be able to further improve Belinau s economics through additional open pit tonnage from satellite deposits and optimisation studies, said Mr Ford. The current JORC mineral resource for Belinau, released in August 2011 and used for the basis of the PFS, consists of total Measured, Indicated and Inferred resource of 127,000 ounces gold and 1,130,000 ounces silver. 1 As defined by Brooke Hunt, where C1 costs are after royalties and selling costs but before amortisation of capital. SUMATRA COPPER & GOLD plc ABN Level 2, 66 Hunter Street, Sydney NSW 2000 Australia P F E info@sumatracoppergold.com W Registered in England and Wales Registered Number Registered address: 39 Parkside, Cambridge CB1 1PN United Kingdom

2 Independent mining consultants Mining Plus Pty Ltd designed and costed the mining component of the study and Como Engineers Pty Ltd ( Como Engineers ) the design and construction of the processing plant. The study included a number of key contributors, consultants as well as Sumatra s in house personnel. The PFS has been based on a gold price of US$1,500 per ounce for gold and US$30 per ounce for silver. The price assumptions for gold and silver will be reviewed again for the DFS. OPTIMISATION Optimisation studies currently being undertaken are expected to reduce the operating costs further by the increased use of local labour and the application of hand held mining techniques similar to the Way Linggo Gold project 150 kilometres south owned by Kingsrose Mining Ltd ( Kingrose ). Key points highlighted from the study: In support of low cash cost and increased NPV, a review of the open pit potential should be undertaken. Dewatering of the existing pit and relocation of the portal access to the base of the pit allowing early access to mineralisation and a subsequent expected reduction in capital and pre-production expenditure. There remains significant potential scope to reduce expatriate labour. Reduction and optimisation of mining costs by undertaking a competitive tendering process. An Owner Miner vs Contractor study should be undertaken. Examine hand held methods used successfully at Kingsrose s Way Linggo operations in addition to mechanised mining currently planned for Belinau. Potential for significant reductions in EPCM costs by delivering project in Indonesia. PFS TECHNICAL SUMMARY Belinau Ore body average dip (sub vertical) Strike length Mining depth Average ore body width Diluted tonnage 86 degrees 560 metres 225 metres 2.3 metres 5.8 g/t Au and 50 g/t Ag Mining mineral recovery 81% Development drive dilution 72% Stope dilution 10% 2

3 MINING Mineralisation at Belinau has an estimated strike length of 560 metres, an average width of 2.3 metres and dips at an estimated sub-vertical 86 degrees (Figure 1). Mineralisation remains open at depth to the south-west. An underground mechanised mine will be developed to extract the gold and silver comprising of 2,360 metres of decline access development and a total of 4,636 metres of lateral development. All underground development and stoping will be carried out by a mining contractor with mine planning and geological support provided by the Company. The final mine design extraction sequence is based on dual mining horizons where the mineralised zone is sub-divided into two mine production centres separated by an artificial cemented aggregate pillar. At the completion of lateral development within each production centre, mineral extraction commences from the bottom up using conventional mechanised longhole stoping. As each level is stoped, the void is backfilled with waste rock and the next lift mined. The waste backfill creates stability but also importantly maximises mineral recovery by removing the requirement to leave supporting pillars. All material for processing will be trucked to a surface ROM and then hauled by a local contractor to the mill. Figure 1: Belinau long section, Tembang 3

4 Figure 2: Mine access and capital development layout Figure 3: Mine development looking west 4

5 PROCESSING The processing plant design will utilise conventional Carbon-in-Leach process technology which was operated successfully in the previous mining operation. The location proposed for the new processing plant is at the previous plant site location, which will be re-commissioned for the first year s production. The concrete footings at the old plant site will be inspected to determine the potential for reuse. The PFS provides sufficient process design to enable the design and construction of the processing plant to be largely accomplished by Indonesian multi-disciplined engineering groups with review by consulting groups like Como Engineers, who can provide in country process engineering input. This approach has proved successful on a number of mining projects in recent years (e.g. Finders Resources copper SX/EW demonstration plant, Kingsrose s Way Linggo plant) and is similar to the approach being adopted at Sihayo Gold s Pungkut gold project in Sumatra. Duel fuel power generators are proposed to provide for a switch from diesel to LNG when a planned LNG plant is constructed in close proximity to the Tembang mine. Significant cost savings will be targeted from 2014 from local natural gas resources. The process plant will be managed and operated largely by Indonesian nationals with expatriate staff numbers limited to the underground mining activities in the early years. Sumatra believes this is achievable given the abundance of experienced technical process staff to be found in Indonesia. Figure 4: Conceptual processing plant layout 5

6 SURFACE STATUS Existing site infrastructure includes a 60 man accommodation camp which is supported by high speed internet and cellular phone networks. The site is located approximately one hour from a commercial airport and is accessed via the sealed Trans-Sumatra highway. A town nearby is expected to provide housing and for a day commute for some administrative staff. Access roads at the Tembang site are in good condition with only minor upgrades required to provide for haulage of underground mineral and mine waste. Dewatering of the Belinau open pit is expected to commence in the second quarter to provide for infill and geotechnical drilling to commence in the third quarter. KEY PROJECT FUNDAMENTALS The Belinau PFS has confirmed a technically and financially robust mining operation with the following key project life-of-mine ( LOM ) parameters: PFS Fundamentals Mining method Project construction First production Processing rate Mine life Metallurgical recovery gold Metallurgical recovery silver Average annual gold production Gold production (LOM) Silver production (LOM) C 1 cash operating costs (LOM) Underground open stoping with rock fill 9 months (before first mineralised material milled) 6 months before first mineralised material accessed from underground Stage one -200,000 tpa 3 years 90% 80% 34,000 ounces 101,000 ounces 765,000 ounces US$511/oz (including silver credits using US$30 per ounce silver) 6

7 CAPITAL COST BREAKDOWN $M Construction (plant, equipment and infrastructure) $22 Underground mine development $22 Other pre-production including $4 Total Pre-production Capital $48 LIFE-OF-MINE OPERATING COST ESTIMATES Payable Gold (US$/oz) Mining $497 Processing $136 Administration $39 By-product credits ($161) TOTAL $511 FINANCIAL EVALUATION Life-Of-Mine $M Project revenue $175.5 Royalties $6.6 Operating costs and sustaining capital $69.5 Project operating cash flow (pre-tax) $100 Pre-production capital expenditure $48 Project cash flow (pre-tax) $43.5 Project IRR 31% 7

8 Belinau Resource Tembang Mineral Resource August 2011 Reported to JORC Code Standards BELINAU VEIN Belinau Above 2.78g/t Underground Cut-Off Ktonnes Au g/t Ag g/t Au koz Ag koz Measured Indicated Inferred Sub-Total ,130 The Belinau Resource was published on the 5 September The PFS study has been based on this Resource. For further information please contact: Julian Ford Chief Executive Officer Sumatra Copper & Gold plc Richard Edwards Company Secretary Sumatra Copper & Gold plc Melanie Gray Stokes Investor Relations Walbrook IR About Sumatra Copper & Gold Sumatra Copper & Gold plc (ASX: SUM) is an emerging gold and silver producer and the pre-eminent precious metals explorer in southern Sumatra. It has a significant greenfields to brownfields project portfolio covering more than 3,200 km 2. Sumatra s 100%-owned Tembang Project is on-track for production during It has a JORC resource of 976,000 ounces gold and 12.8 million ounces silver. Initial stage 1 production plan is low cost, high-grade operation, targeting 200,000 to 400,000 tonnes per annum. Under a joint venture with Newcrest Mining Ltd, Sumatra is currently exploring the Tandai Project (30% Sumatra; 70% Newcrest). Newcrest has already met its minimum expenditure position of US$1.75 million and has an option to earn a 70% interest by spending US$12 million over 5 years. Sumatra has found significant gold mineralisation at Tandai, which has historic high grade production of 1.4 million ounces gold. Sumatra continues work at its wholly-owned Sontang Project, which is a high grade greenfields exploration project. The Company has offices in Jakarta, London, Perth, Sumatra and Sydney. Competent Person Statement The information in this report that relates to Mineral Resources is based on information compiled by Mr David Stock MAusIMM who is an independent Geological Consultant to the Company and is a Competent Person as defined by the Australasian Code for the reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code 2004 Edition) and has consented to the inclusion in this report of the matters based on his information in the form and context in which they appear. The financial information and project management for this Pre-feasibility Study was managed by Mr Grant Harding who is a Fellow of the AusIMM. Mr Harding has consented to the inclusion in this report of the matters based on his information in the form and context in which they appear. pjn6534 8