Arc Exploration updates Cibaliung gold project activity
Thursday, September 11 2008 - 02:35 AM WIB
Total decline development to date has advanced to over 1,100 metres. Development is currently proceeding on three headings to access the Cikoneng ore shoot. The stockpiling of mineralised rock has commenced from the vent access cross-cut. The cross-cut No.1 is within 6 m of the projected ore shoot and cross-cut No. 2, which was only recently commenced, is 35m from the projected ore shoot The Cibitung decline development is currently on hold pending resolution of a longer term financial solution for completion of the mine.
August 2008 base camp financial model:
As part of the Company?s periodic review and update of estimated project costs and funding requirements and finalising the group?s half-year financial results, the Company completed a further review of its detailed Base Case Financial Model (BCFM) in late August 2008. The BCFM assumes that first gold pour will not be achieved until the third quarter 2009. Production is projected to ramp up to planned throughput of ~260,000 tonnes per annum over an 18 month period from first gold pour and to achieve positive cash flow in the March quarter of 2010. Net total Development (Capex and Opex less revenue) costs from commencement of construction in July 2005 through to positive cash flow are expected to amount to US$129.2 million. Total development expenditure (excluding project exploration and development prior to July 2005) to 31 August 2008 stands at approximately US$87.7 million. Further funding of US$41.5 million is required to achieve positive cashflow (including an additional provision for contingency but excluding planned exploration at Cibaliung).
In addition, the revised BCFM identifies increases in the life of mine cash operating costs from the US$366/ounce advised in July 2008 to a revised cash operating cost of US$398/ounce.
The increase of US$32 /ounce is primarily attributable to the following:
? increased cost of support associated with more extensive use of rock bolts, mesh and fibrecrete in underground development;
? increased allowance for labour, employees and employee on-costs;
? increased fixed costs over life of mine
? reduced by-product credits with the fall in silver prices
Project Funding
The Company is in ongoing discussions with a number of parties who may earn a direct interest in the project by funding the remaining development expenditure.
The Company is also in ongoing discussions with ANZ Bank regarding existing debt and hedging facilities. The ANZ Bank has agreed to provide an additional cost overrun facility in the amount of US$4 million subject to satisfaction of certain conditions precedent which the Company is now seeking to address. This additional funding is expected to enable operations to continue at Cibaliung until 31 October 2008. ANZ Bank has advised the Company that it will not be in a position to provide additional funding beyond that date.
The Company will shortly require further funding to continue the development of the Cibaliung Gold Project if a farm-in partner is not identified. If such or alternate funding is not obtained in a timely manner the Company will halt operations at Cibaliung. (end of edited release)