Arc Exploration updates Indonesian mining ops
Friday, August 1 2008 - 05:20 AM WIB
Cibaliung Gold Project (95%) ? Banten
Key development and production parameters for the Cibaliung Gold Project are:
? Two shoot epithermal vein-gold deposit;
? Logistically well located within a 4 hour drive from Jakarta;
? Mine life of 6 years with a production rate of - 260,000 tonnes per annum with recovery of gold and silver by a conventional CIL processing plant;
? Mining by conventional underground cut and fill stoping with decline access;
? Annual production of approximately 70,000 ozs gold equivalent;
The Company anticipates that first gold pour will occur within the first half of 2009 subject to funding, satisfactory underground development and progress in terms of construction of the gold processing plant and development of mine infrastructure.
Expenditure in relation to development of the Cibaliung Gold Project totalled A$8.4 million during the quarter
Base Case Financial Model
A further revised Base Case Financial Model (BCFM) is in the process of being finalised to reflect development delays due to funding constraints and a more accurate mining schedule and costs based on underground mining experience to date. The latest estimate for life of mine cash operating costs (by-product method) stands at US$366/ounce. This estimate is also under further review.
Decline Development
Ground conditions in the decline continued to be very poor throughout the quarter. Remedial work continued where required on both the Cikoneng Decline and the Cikoneng Vent Shaft Access.
Total decline development at 30 June 2008 stood at 976 metres (including muck bays and other underground development). The remaining distance to the ore body is less than 20 metres on the first cross-cut. The Company now expects to commence stockpiling ore in August 2008.
Gold Processing Plant
Civil, structural and mechanical installation work was undertaken during the early part of the quarter however this work was halted in June in order to conserve financial resources. The processing plant is now on limited care and maintenance while planning for recommencement of construction is being undertaken. Work will recommence when the Company has put in place funding to complete the Project. Other infrastructure works on site have also been scaled back to conserve financial resources in the near term.
Funding Strategy
The Company advanced negotiations during the quarter with a number of potential farm-in partners to fund the major portion of the remaining development expenditure through to positive cash flow in exchange for a significant equity interest in the project. Farm-out negotiations were completed with one party and a Heads of Agreement was signed in May. However this party withdrew from the proposed transaction in early June 2008. The Company continues to seek suitable joint venture partners.
ANZ Bank agreed to allow the Company to draw on a US$5M Cost Overrun Facility to enable the Company to continue development at Cibaliung through to the end of August. These funds are primarily being applied to advance the main Cikoneng decline, vent access and cross-cuts to ore in the Cikoneng ore shoot with the objective of reaching the ore body and commencing the stockpiling of ore.
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 funding is not obtained in a timely manner the Company will need to review all operations.
Cibaliung Exploration
The exploration team continued providing technical support to the mine development. This work included underground geological and geotechnical mapping.
Assay results were received for the last three holes of an eight-hole (AC-135, AC-139 to AC-1 45) infill diamond drilling program completed at the top of the Cikoneng ore-shoot in the last quarter. Drill-hole details and best mineralised intercepts for AC-143, AC-144 and AC-145, are presented below. The results of the infill drilling have generally confirmed the predicted position of contacts, expected grades and thickness of the ore at the top of the Cikoneng ore-shoot.
Expenditure in relation to Cibaliung Exploration totalled A$14,000.
Project Generation ? Indonesia
The Company is exploring for high-grade epithermal gold-vein deposits on the island of Java, which lies on the highly prospective Sunda-Banda volcanic arc. The geological settings of the Company?s Cibaliung, Trenggalek and Pekalongan projects on Java show strong similarities to world-class gold deposits lying on or close to the same volcanic arc (Pongkor & Gosowong).
Total Expenditure for exploration completed on the Trenggalek and Pekalongan projects totalled A$56,000 during the quarter.
A new exploration area known as Bima in West Nusa Tenggara Province, East Sumbawa was granted in which ARX has a 95% joint venture interest.
Corporate
Following shareholder approval during the quarter the Company completed a 50 to 1 consolidation of capital, a change of status from NL to Limited and a change of name from Austindo Resources Corporation NL to Arc Exploration Limited. (end of edited excerpt)