G-Resources: Martabe project update
Wednesday, January 18 2012 - 07:36 AM WIB
Site Deliveries
More than 85% of materials and equipment have been shipped. The remaining deliveries are scheduled to arrive within the next few weeks. There have been delays for some of the remaining equipment - the project management team is working vigorously with the relevant suppliers to recover this time.
Capital Costs
The total estimated capital cost estimate for the project and working capital remains at $576M.
To date, commitments of $544M have been made and expenditure of approximately $464M incurred. The balance of $112M will be spent in the coming months.
Construction Progress
Rainfall in October and November 2011 was marginally greater than seasonal average, but December at 832 mm was double seasonal average and almost 25% of total annual rainfall fell in the month. This heavier rainfall impacted some activities significantly and others to a lesser degree.
Concrete works remained a focus during the quarter and concrete placement is currently greater than 80% with the remaining key works planned to be completed in coming weeks.
All large tankage for the process plant is complete including internal lining and external painting. The raw water tanks are complete. The Waste Water Treatment Plant (WWTP) tankage is all erected and in the process of being installed. The remaining large tank structure is the 48 metre diameter WWTP thickener which is currently under construction on site.
The prime project focus has shifted from concrete to steel and mechanical installation. Both the Ball and SAG mills are fully assembled and erected, mill motors in place, ring gears installed and ancillary equipment being completed. Steelwork on top of and around the CIL tanks is well advanced as well as around the milling area. The progress of steel erection has been slower than planned and alternative strategies are being implemented to reverse and recover any lost time. In coming weeks, steel erection in all other areas is anticipated to accelerate rapidly.
Steel process plant piping has started to be installed on piperacks.
The Electrical and Instrumentation contractor has mobilized to site and commenced activities in a number of areas.
In the last quarter, the Administration building, the Clinic and the final accommodation units have been completed and handed over. On 14 January 2012, a significant cultural event occurred, with a formal Batak ceremony being conducted by ten Kings from the local communities closest to the mine inaugurating the opening of the Administration Building which has been built in the local Batak style. The Kings conferred the name ?Sopo Nauli? (beautiful house) on the Administration Building.
The high voltage (?HV?) switchyard is currently being commissioned with power supply from 13 of the 32 diesel generator sets now installed and operational. Electrical power is now available for commissioning.
Construction of the TSF has been slower than planned primarily due to excessive wet conditions, although recent activities have been positive and efforts are focused on recovering lost time.
One of the Sedimentation Dams is structurally complete with the other at 70%. The liners for both dams are anticipated to be completed by the end of February 2012.
Schedule
Due to recently advised late deliveries of switchrooms and also conveyor steelwork, as well as slower than planned erection of steelwork on site, there is a potential slippage to the schedule. A number of mitigation strategies have been implemented which are likely to have a positive impact. Every effort is being made by all construction teams to achieve earliest gold production whilst ensuring the highest quality and maintaining the excellent safety record. In the next few weeks the results of the current mitigation activities will be reviewed. Considerable effort is being applied to recover any lost time.
Notwithstanding the above challenges, most areas of the project remain on schedule - power supply, mill installation, tank installation etc.
Operations Readiness
Grade control (GC) drilling commenced early in the last quarter with more than 2,900 metres drilled and 2,981 samples processed. The assay results from the GC drilling have confirmed the resource model for those areas.
With the GC results being regularly reported, ore mining and stockpiling activities are about to ramp-up in preparation for process plant operations.
The assay laboratory construction and implementation has not been achieved in the timeline provided by the contractor. Support and assistance by G-Resources has been required to accelerate this activity which is now expected to be completed in February 2012.
The operations and maintenance leadership team is now in place, process plant operator training is about to commence and commissioning planning and general operations preparation is well advanced.
Some of the first fill of reagents is anticipated to be delivered to site in the next few weeks.
The sourcing of maintenance spares is well underway with ordering and deliveries anticipated in coming weeks.
Financing
On 5 December 2011, the Company announced that it had executed a $100M Revolving Credit Facility Agreement with BNP Paribas, Hang Seng Bank Limited and Sumitomo Mitsui Banking Corporation (?Facility?). This Facility will be available for Martabe project completion if required and for general corporate purposes thereafter. Subsequently the Commonwealth Bank of Australia has been included in the consortium.
At the end of December 2011, the Company had $154M cash on hand which will be used to fund the remainder of the project cost and service working capital, exploration and overhead costs up to first gold production. Any delay in project delivery could have an impact on final project costs, but at this stage this is not considered to be significant.
Exploration and Resources
Exploration work continues around the Martabe project area, and is increasingly being directed to regional exploration. Drilling has been underway at the Tor Uluala and Horas Barat deposits near Martabe, and at the Tango Papa and Kapur Prospects on the 1,639km2 Contract of Work (?COW?).
Near Mine Exploration
Drilling continues at the Tor Uluala deposit following the release of an initial resource estimate in September 2011. This drilling has discovered extensions of the deposit to the north of Tor Uluala, and defined additional mineralised zones parallel to the current resource block model along its +1km strike length. A further thirty holes have been drilled since the drill hole database was closed for the Tor Uluala Mineral Resource Estimate in September 2011.
Regional Exploration
At the Tango Papa Prospect area 20 kilometres to the north of the Martabe Deposits, a first stage program of six diamond drill holes has been completed. One of these holes intersected an interpreted zone of altered and weakly mineralized colluvium (rock rolled down a slope by gravity) or landslide material. Final results for this drilling are awaited. It is interpreted that this material is rolling from a mineralized system which forms the crest of a hill, over which is mapped surface alteration with a coincident geophysics resistivity anomaly. This is one target within a cluster of altered hills and cliffs at Tango Papa, covering a total area of about six square kilometres. Surface rock sample results up to 20 g/t gold have been returned from the Tango Papa Prospect, which is targeted for both near surface epithermal gold and buried porphyry copper-gold potential.
At the Kapur prospect, 25 kilometres south east of the Martabe Deposits, a program of drilling has commenced to follow up previous results. Of the twenty-four holes drilled in 2007, thirteen returned significant intersections. Best results from this previous drilling program include:
- AKSD009: 27.1m @ 3.21 g/t gold, 1 g/t silver from surface;
- AKSD010: 9.1m @ 15.29 g/t gold, 11 g/t silver from surface;
- AKSD014: 22m @ 0.71 g/t gold, 42 g/t silver from 27m.
At the Southern Corridor Prospect area, exploration is targeting previously identified magnetite skarn mineralisation and epithermal alteration systems. Exploration targets are buried porphyry copper and associated copper-gold skarns, and low sulphidation and high sulphidation epithermal systems. Community and government relations work has successfully commenced and field camps are being established in preparation for field work and surface geophysics. A substantial amount of high quality historical data is available and it is anticipated that initial drill targets will be rapidly defined after field work commences in January 2012.
The Kapur Prospect lies within production and limited production forest areas, and the Tango Papa and Southern Corridor Prospects are covered largely by protected forest area with some privately held land (Tango Papa) and some limited production forest (Southern Corridor). PT Agincourt Resources has appropriate rent use permits issued by the Ministry of Forestry which allows exploration on these areas.
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. The project is established under a sixth generation 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 7.86 million ounces of gold and 73.48 million ounces of 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 at the Purnama pit in 2012 at a rate of 250,000 ounces per annum of gold and 2-3 million ounces per annum of silver at an anticipated life of mine low cash cost of below $250 per ounce 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 release)