Oxiana says Martabe gold, silver project to proceed

Australian firm Oxiana Limited said on Wednesday that following the recently completed definitive feasibility study (DFS), its board had approved the development of the Martabe gold and silver project in North Sumatra.

The board's approval is subject to the receipt of final permits from the Government of Indonesia, which are expected by April 2008. In the meantime, this approval allows the project to proceed on a fast-track time line providing for commissioning of the project in December 2009, the company said.

The capital cost of the project is estimated at US$310 million (including contingency and escalation allowances of US$48 million). Average annual total cash costs of production are estimated at US$270/oz, it said.

The Martabe DFS was based on the single Purnama deposit which has an initially identified mine life of 9 years with annual production of 200,000oz of gold and 2,000,000oz of silver. Two other adjacent deposits, Baskari and Pelangi, plus primary gold potential at depth and other un-explored areas of Oxiana?s tenement represent significant upside potential.

Mining of the Purnama deposit at Martabe will be undertaken by conventional open-pit methods with a low average strip ratio of 0.7:1.

The processing plant will be a large-scale ore processing plant treating 4.5 million tonnes of ore per annum using proven SAG and Ball milling and carbon-in-leach (CIL) technology. Recoveries will average 76% for gold and 55% percent of silver. The plant and infrastructure will be designed to allow for future expansion.

The exploration focus for 2008 will be prospects close to the Purnama pit including Baskara, Gerhana and Kejora. Encouraging results from Gerhana have included 112m at 4.15g/t gold and 42m at 1.94g/t gold.

Also a priority is the Kapur-Gambir district, approximately 30km to the south of Pumama, where previous drilling has returned results including 109.7m at 2.7g/t gold and 55.1m at 2.9g/t gold.

The total resource base at Martabe is 5.8Moz gold and 60.0Moz of silver including 4.4Moz at the Pumama deposit and 1.4 Moz at the Baskara and Pelangi deposits. At Purnama, Probable Reserves of 2.3Moz gold and 30.1Moz silver have now been estimated as part of the DFS.

The Martabe project is currently 100% owned by Oxiana Limited, with 5% held in trust for local Indonesian stakeholders. (denny)