G-Resources: Martabe project update
Tuesday, August 16 2011 - 06:53 AM WIB
1. Engineering
Ausenco Limited has essentially completed all engineering and procurement activities. A small team has been retained in the Brisbane office to support site activities and to deal with vendor queries.
2. Contracts and Purchase Orders
In the past two months, most of the remaining key contracts have been tendered, evaluated and awarded, only one significant contract is outstanding and this is currently being finalised. Specifically the mill installation has been awarded to PT McConnell Dowell, the steel mechanical and piping contract has been awarded to PT McConnell Dowell, the tank lining contract to PT Tekindo Wiyana Perkasa, and the electrical and instrumentation installation contract to PT ODG Wormald Indonesia.
In addition, 97 of the 99 purchase orders have been placed, with only two minor purchase orders outstanding. The total value of contracts and awards placed is now greater than $400M.
3. Capital Costs
The total capital cost estimate for the project and working capital is the same as previously stated i.e. $576M.
To date, commitments of $493M have been made and expenditure of approximately $314M incurred. The balance of $262M will be spent during the remainder of 2011 and Q1 2012.
4. Construction Progress
Project construction progress has rapidly accelerated through April to July. Rainfall has at times impeded activities, but as progress has advanced, the recovery time to recommence works has improved dramatically.
PT Leighton Indonesia has completed the excavation and bulk earthworks activities on the carbon-in-leach platform, the mill platform and the high voltage switchyard platform, with works advancing well in the crusher and ROM (Run of Mine ore) pad areas.
All earthworks preparation activities for building the TSF are complete including excavation of the footprint and placement of foundation and piping materials.
All access and haul roads have now been developed, with some outstanding road widening works ongoing. Water capture structures have all been built with diversion piping construction well advanced.
Other infrastructure facilities such as the workshop, the warehouse, the permanent administration building and the final stage of camp accommodation are all progressing with handover and occupation likely in the near future.
Concrete works are accelerating rapidly with major pours being completed for the large building structures, 9 of 10 ring beams in the CIL area and the mill foundations now complete.
All the steel plates for the construction of the ten large carbon-in-leach tanks have been manufactured and delivered to Martabe. PT Epiterma Mas is established at site and welding and construction of these large 15m diameter by 15m high steel tanks is proceeding ahead of schedule.
The completion of the supply of power from the high voltage grid has not advanced as rapidly as planned, therefore the Company has initiated the installation of a temporary diesel fired power supply facility, which will ensure power is available in sufficient quality and quantity for start up. For prudence, the Company has assured the supply will be available for six months and the arrangement with the supplier will be on a leased ?build-own-operate? basis. The longer term supply from the HV grid will now probably occur in Q2 2012.
5. Schedule
Whilst there has been good progress on many fronts in the past three months, the achievement of some of the earthworks and concrete works milestones has not been met due to a number of factors, including rainfall, increased volumes of material in some areas and harder ground conditions than anticipated. A planned re-assessment of the project schedule in early August has yielded a target first gold production towards the end of the first quarter 2012 with ramp up thereafter. Every effort and strategy is being assessed by the Company and the key contractors to accelerate activities to bring the project in as early as possible.
6. Operations Readiness
Mining operations within Purnama Pit have commenced. Access roads within the pit of approximately 1km in length have been developed from the plant site to the southern extremity of the ore body. The main mine haul roads into and out of the Purnama Pit are well advanced. An in-pit ore stockpile area has been established, waste mining has commenced and ore has been exposed although deliberately not mined yet.
The appointment of a Mine Geology Manager and Senior Processing Manager complete all of the senior operational appointments for the mine. The immediate next appointments will be the key process, maintenance and training staff.
Negotiations on major operating supply contracts are well advanced, including bullion refining, cyanide supply and other chemicals and reagents. Orica has been appointed as the supplier of cyanide utilizing their patented isotainer technology, which conforms to world?s best practice including the gold industry Cyanide Management Code. The supply of cyanide has a face value of $75M over five years. The contract for laboratory services has been awarded to an international accredited laboratory services provider, PT SGS, for a value of approximately $5M over three years.
7. Financing
On 28 July 2011, the Company announced a placement of twenty percent of the existing issued share capital at that time at a price of HK60c/share.
This equity raising rather than the previously advised plan of bank debt funding, generated funds of approximately $213M. This placement, plus cash and liquid investments yield a total balance at early August of approximately $315M which is sufficient to fund the remainder of the project including exploration and working capital.
The global market place uncertainties at the end of July caused the Company to reconsider its planned debt funding. The Company considered it prudent to secure its financing position as rapidly as possible and the most expeditious route of a placement of shares was selected. This was immediately successful, confirming shareholders confidence in the Company and the Martabe Project
Whilst the Company is essentially fully funded to complete the Martabe project, the Company may seek to arrange a bank overdraft facility to service any additional working capital requirements.
8. Exploration and Resources
The Company is continuing with its aggressive exploration programme on the 1,639km2 Contract of Work area. In 2011, the Company will spend approximately $15M on near mine and regional exploration.
A maiden Reserve Statement for Ramba Joring was released on 11 May 2011, yielding 6 million tonnes of ore at 1.6 g/t gold and 4.2 g/t silver for 315,000 ounces of gold and 810,000 ounces of silver. Ramba Joring is about 1km from the Martabe process plant and this ore reserve is readily treatable in the existing facility. Ramba Joring is open at depth and along strike, and has sulphide potential at depth.
On 8 June 2011, the Company announced some excellent drill results at both Tor Uluala and Horas, including 16.8m @ 4.58 g/t gold, and 17.5m @ 3.05 g/t gold, at Tor Uluala and 47.5m @ 1.56 g/t gold at Horas. Maiden resource statements for both these deposits are currently in preparation.
Further drilling at Tor Uluala, immediately to the north of Ramba Joring, has yielded the following results:
76.2m@2.02 g/t gold and 2.28 g/t silver from surface
75.4m@0.95 g/t gold and 12.26 g/t silver from 8.0 metres
21.1m@1.68 g/t gold and 4.71 g/t silver from 41.4 metres
Further work at Horas continues to produce wide, moderate grade intersections. The deposit is a shallow west dipping, highly continuous and open at depth and to the north. Exploration and surface sampling has located further quartz-sulphide breccias to the west of Horas, which may be another parallel zone or a vertical feeder zone. More recent results include:
27.2m @ 1.52 g/t gold and 5.54 g/t silver from 63.0m
23.2m @ 1.25 g/t gold and 2.90g/t silver from 50.0m
43m @1.32 g/t gold and 3.11 g/t silver from 37.0 m
The exploration results and the conversion to reserves at Ramba Joring continue to demonstrate the high potential for additional gold reserves in the Martabe district, as well as conversion to reserves for longer life and potentially expanded capacity.
About Martabe
The Martabe project is located on the western side of the Indonesian 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 6.73Moz gold and 68.31Moz 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 first quarter of 2012 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 below $250/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 Indonesia Central, Provincial and Local Governments and the nearby communities of Batangtoru. (end of edited release)