G-Resources: Martabe project update
Monday, October 31 2011 - 08:20 AM WIB
1. Engineering, Contracts and Purchase Orders
These activities are complete with only a small team retained in the Ausenco Brisbane office to support site activities and to deal with vendor queries.
2. Site Deliveries
All the equipment that was stored in the Singapore warehouse has now been delivered to site. Most of the large ?out of guage? pieces of equipment, such as transformers, mill shells and heads, and crusher frames are on site. The largest weight piece of equipment delivered to site was the primary crusher frame at 58 tonnes, and the largest dimension piece of equipment was the mill shell at 6.8 metres.
Other equipment and materials continue to be delivered to site in line with schedule requirements. To date, 70% of deliveries have been landed in North Sumatra with 50% already at the project site.
3. Capital Costs
The total capital cost estimate for the project and working capital is the same as previously stated i.e. $576M. The temporary power station installation and commissioning cost is estimated to be $7M and whilst this is an additional cost it will possibly be covered by the existing contingency.
To date, commitments of $512M have been made and expenditure of approximately $365M incurred. The balance of $211M will be spent during the remainder of 2011 and Q1 2012.
4. Construction Progress
Project construction progress has continued to rapidly accelerated through July to October. September to November is one of the peak rain seasons in North Sumatra, however as plant site earthworks is complete, the impact on project activities is significantly reduced.
PT Leighton Indonesia has completed the excavation and bulk earthworks activities on all areas of the process plant. The remaining project earthworks activities are the completion of the mine ore stockpile area and the continued raising of the tailings dam wall. The tailings dam is currently at a height of 15 metres; the initial height required for project commissioning of 40 metres will be complete by January 2012.
Concrete work has been the prime focus over the past quarter, with the large CIL tank ring beams and all other tank ring beams now complete. The mills foundations and plinth construction is complete. Concrete pouring is advancing in the three remaining main process areas, being the primary crusher, the pebble crusher and the crushed ore stockpile reclaim tunnel. Concrete pours for the water tanks and water polishing plant will be undertaken in the next period. Total concrete poured is currently at 40% with the majority of the remaining concrete to be poured in the next quarter.
The CIL tanks are now completely erected, with painting and lining underway. The remainder of the process plant tank erection is well advanced and expected to be complete within a few weeks.
The steel, mechanical and piping contractor (?SMP?), is on site and has commenced erection of steel in the CIL and mill areas. SMP will be the main project focus for the next quarter. The electrical and instrumentation contractor is due to mobilize in the first week of November.
The workshop and warehouse have been completed, commissioned and handed over. The permanent administration building and the clinic are nearing completion and will be handed over in November. The final stage of camp accommodation is being progressively completed and units handed over, this work will be complete by December.
The high voltage (?HV?) switchyard next to the process plant site is well underway, with concrete works complete and erection of switchrooms due to commence in the next quarter. The foundations for the HV power line towers are advancing.
5. Schedule
Progress in the past three months has met the schedule requirements for first gold pour before the end of Q1 2012.
The focus in the last three months has been on concrete and ensuring sufficient work fronts are completed and available for following contractors. This has been achieved with the tank contractor erecting steel tanks well in advance of schedule and the SMP contractor now on site and active in the mill area.
The current focus is on concrete completion; steel, mechanical and piping erection, and then electrical and instrumentation installation.
The commissioning team has commenced preparation of commissioning planning and in the next period will commence to drive construction completion in specific areas to enable optimum commissioning activities to take place.
6. Operations Readiness
Mining operations within the Purnama pit have commenced with first gold ore mined and delivered to a temporary stockpile. Current priority activities are the development of stockpile areas, the development of a large in pit sump for collection of mine waters and the pre-stripping of waste materials in preparation for continuous mining of ore which will commence in December 2011. Detailed mine planning for operations commencement is nearing completion.
Grade control drilling has commenced in the Purnama pit on the early to be mined benches. The Company has awarded an approximate $1M per annum contract to Boart Longyear, the contractor which has been doing all the exploration drilling at Martabe for the last few years. A large Reverse Circulation (?RC?) drill rig was delivered to site in early October and will commence operations in the next period.
PT SGS Indo Assay Laboratories (SGS), the contractor for supplying and building the on-site laboratory for analyzing grade control samples as well as process plant samples, is on site and the facility is expected to be operational in November 2011.
All senior appointments have now been made, including the key process, maintenance and training staff. Recruitment of operators and maintenance staff is underway.
In the last report, the Company reported the awarding of cyanide supply to Orica, one of the World?s largest suppliers of mining chemicals and reagents. In recent weeks, the Company has completed its tendering process for most of the remaining consumables and has awarded a strategic five year contract to Orica for the supply of all major consumables to the mine. The award of this contract ensures that Martabe has locked in the supply of all major consumables and has achieved the best commercial outcome. In some cases, Orica manufactures its own reagents, in other cases it supplements its own supply with multiple other suppliers, or it sources supply from a range of outlets. This major consumables contract includes the supply of carbon, steel balls, sodium metabisulphite, caustic soda, hydrochloric acid and mercury precipitant. The contract is valued at approximately $53M over the five years.
Transport and logistics is always a significant component of any mining operation, especially a project the size of Martabe, its relative remoteness and the reality that operating consumables and supplies will come from all corners of the globe. The Company has completed its tender process and awarded this contract to an internationally recognised freight and logistics provider, PT SDV Logistics, Indonesia, a subsidiary of the French group of companies the SDV and Bollor? Group. PT SDV will sub-contract the Indonesian components of the work to Meratus, one of the largest providers of this type of service in Indonesia. This contract has a value of more than $10M per annum.
The contract for the refining of gold and silver final products, from the mixed gold and silver bullion that Martabe will produce, has been signed with PT Aneka Tambang who will refine the bullion at their Jakarta refinery, Logam Mulia. The value of the contract is $1.2M per annum.
With the contract awards of all major consumables and detailed mine planning almost complete, preparation of final budgets for Board approval and operations commencement will be undertaken in the next period.
7. Financing
On 7 October 2011, the Company received written commitment for a $100M debt facility with three banks on a one-third each basis, being BNP Paribas, Hang Seng Bank and Sumitomo Mitsui Banking Corporation. This facility will be available for project completion if it is required and for general purposes thereafter. The Company?s preference is to complete the project with its current cash on hand. The Company is finalising the formal loan facility agreement and other ancillary loan documentation with the bank.
At the end of September, the Company had $262M cash on hand. The expenditure on the project to date is $365M, with the forecast remaining $211M to be funded from the cash on hand. The project forecast to spend includes $36M of contingency and growth.
8. Exploration and Resources
The Company is continuing with its aggressive exploration programme on the 1,639km2 Contract of Work (?COW?) area. In 2011, the Company will spend approximately $15M on near mine and regional exploration.
An initial Resource Statement for Purnama Timur was released on 25 July 2011, yielding 5 million tonnes of Indicated and Inferred Resources at 1.5 g/t gold and 13.2 g/t silver for 233,000 ounces of gold and 2,110,000 ounces of silver. Purnama Timur is adjacent to the Purnama pit and will either be mined as a separate ore body or an extension to the Purnama pit.
An initial Resource Statement for Tor Uluala was released on 5 September 2011, yielding 22 million tonnes of Inferred Resource at 1.0 g/t gold and 6.0 g/t silver for 730,000 ounces of gold and 4,290,000 ounces of silver. Tor Uluala is approximately 1km north of the Ramba Joring deposit and 2 km from the Martabe process plant.
An initial Resource Statement for Horas was released on 27 October 2011, yielding 15.7 million tonnes of Inferred Resource at 0.8 g/t gold and 1.7 g/t silver for 400,000 ounces of gold and 880,000 ounces of silver. Horas is approximately 1.5 km south of the Barani deposit and 3 km south east of the Martabe process plant.
On 6 October 2011, the Company announced some excellent drill results at three new target areas, Horas Barat, Tor Uluala Barat and Purnama Dalam. All prospects returned significant intersections of gold and silver.
At Purnama Dalam, diamond drilling intersected a wide zone of high intensity siliceous alteration. This is interpreted to represent the down plunge extensions of higher grade gold-silver shoots within the Purnama deposit. Best results include:
8.6 metres @ 4.53 g/t gold, 58 g/t silver;
13.0 metres @ 2.73 g/t gold, 29 g/t silver.
At the Horas Barat prospect, surface mapping and drilling located high grade gold-silver zones which may be an extension of the Horas deposit or a distinct, new deposit 300 metres to the west. Best results include:
9.5 metres @ 7.10 g/t gold, 42 g/t silver;
11.0 metres @ 26.2 g/t gold, 23 g/t silver.
At the Tor Uluala Barat prospect, drilling confirmed extension to depth of a drill hole intersection from a previous campaign. Continuity of mineralisation along strike is indicated by surface mapping and sampling. Best results include:
9.3 metres @ 3.36 g/t gold, 14 g/t silver.
These results confirm the continued opportunity for discovery of additional gold and silver at Martabe.
The Indonesian subsidiary of G-Resources, PT Agincourt Resources, has received renewal of permits required from the Mining and Forestry departments to continue exploration on the COW prospects. (end of release)