G-Resources: Martabe project update
Monday, July 26 2010 - 06:50 AM WIB
The Company has largely overcome the project difficulties encountered as a consequence of a landslip caused by severe rainfall events earlier in the year reported in the Company?s announcement dated 31 March 2010.
1. New Locations for Process Plant and Tailing Storage Facilities
As mentioned in the Company?s announcement dated 12 July 2010, the Company has identified new locations for the process plant site and tailing storage facilities (?TSFs?). It is understood that minimal modifications to the project environmental documentation will be required and no changes to the construction approval are anticipated.
The Company has conducted extensive geotechnical surveys and drillings at the new locations for the process plant and the TSFs. Geotechnical engineers have advised and confirmed to the Company that the new sites are suitable locations for the process plant and TSFs.
Engineers and designers are working on the new design of the TSFs at new locations and on the revised plant site earthworks. To meet the target of the Company to produce gold in the last quarter of 2011, the Company has already given instructions to contractors to commence mobilization for early works construction including haul roads for access to the TSFs and process plant.
The design of the process plant remains unchanged. All long lead time equipment has been ordered and many of these have been delivered to the Company?s warehouses.
2. Increased Capital Cost
The original estimated capital costs of the Martabe Project was approximately US$360 million. Up to 30 June 2010, approximately US$150 million have been spent.
Due to change of locations for the process plant and the TSFs, the Company estimates that the capital costs for the construction of the Martabe Project have to increase by approximately US$80 million. The Company believes it has sufficient funding and resources to complete the building of the Martabe Project to first gold production.
The increased capital costs are mainly contributed by new designs of TSFs and increased earthworks for the new process plant site.
3. Estimated Operating Costs Remain Intact
The cash operating costs will not be significantly impacted by the change in location of facilities. The Company estimates the present reserves gold production costs will remain at US$280/ounce.
4. Gold Production Schedule
The Company targets to produce gold from its Martabe Project in the last quarter of 2011. The Company is working very closely with contractors to optimize the schedule. However, there will not be any compromise on safety, environment or quality.
5. Other Activities at Martabe
Exploration activities continue. The Company has also continued with other site activities, such as road works, camp infrastructure and power line design when the construction work for the process plant was suspended pending the Company?s review of the best locations and layout for all project facilities.
The main access road to the mining area and camp facilities for site and mining workers has been completed. Important contracts for operations at the Martabe site, including air service contract, catering contract and security contract, have also been tendered and awarded.
ABOUT MARTABE
The Martabe project is located on the western side of the island of Sumatra in the Province of North Sumatra, in the Batangtoru sub-district (Figures 1 and 2). The project is established under a sixth generation Contract of Work (?COW?) which was signed in April 1997.
The COW defines all of the terms, conditions and obligations of both G-Resources and the Government of Indonesia for the life of the COW.
Martabe with a resource base of 6.5Moz gold and 66Moz silver is G-Resources Group?s core starter asset, around which a globally competitive, Asia-Pacific focused gold company will be built. Already in construction, Martabe is expected to commence production in the last quarter of 2011 at a rate of 250,000 oz/a of gold and 2-3 million oz/a of silver at an anticipated low cash cost of US$280/oz of gold.
G-Resources is seeking to rapidly grow production to more than one million ounces of gold annually through exploration of the large and highly prospective COW area and through acquisition of other quality gold assets. The Martabe project enjoys the strong support of the Central, Provincial and Local Governments and the nearby communities of Batangtoru. (end of edited release)