Release: G-Resources: Martabe Project update
Wednesday, March 31 2010 - 01:15 PM WIB
In summary:
? The project has experienced unusually high rainfall in January, February and March including a number of extreme individual events. This has resulted in a review of the best location of some of the project?s facilities. This is likely to lead to a slippage in the current schedule to produce gold in the first quarter of 2011 whilst the optimum long term plant location and configuration is reviewed and finalized. Gold is still targeted to be produced in 2011.
? Under the Ausenco EPCM contract, the full engineering project team is in place and activities proceeding. The project is now at about 60% engineering completion. A number of construction contracts have been advanced including the concrete works and electrical power supply infrastructure.
? Under the Owner?s scope of work, a number of contracts have been advanced to the stage of ready to award, these are aircraft charter, the catering contract, the mine drill and blast contract, and the mining contract. For the mining contract which is valued at approximately US$150M over 5 years, a Letter of Intent has been issued to the preferred contractor.
? Permanent camp accommodation will be developed in three phases. The first phase is complete and fully occupied, the second stage is nearing completion and will be ready for occupation shortly, the third stage is under development.
? Re-estimates of operating costs, capital costs and the schedule will be undertaken once the final project configuration is confirmed.
? Exploration drilling activities have continued to produce excellent results at Barani, Ramba Joring and Pit 1. This will be the subject of a separate announcement in April. Recent highlights include* 37.40m @2.42 g/t Au, 56m @1.83g/t Au, 67.2m @3.37 g/t Au and 11.4m @3.15 g/t Au from Ramba Joring. In the vicinity of Pit 1 drilling has returned 25m @2.62g/t Au and 69m @1.60 g/t Au while at Barani recent drilling includes 30.90m @4.27 g/t Au.
? The Company is pleased to announce a maiden Barani reserve statement yielding 225,000 ounces of gold which is in line with previous guidance. (see below).
? The Central Government, the Provincial Government, the Regency of South Tapanuli and the communities in which the mine is located all remain extremely supportive and this has been demonstrated a number of times in recent months as the project has advanced to its current stage of development.
Project Facilities Review
In January, February and March, the project site experienced rainfall almost double historical average, as well as a number of extreme rainfall events including one event which was in excess of a 1 in 25 year storm event. This has contributed to ground destabilization at the proposed plant site location and has therefore caused project management to reconsider the optimum location of some of the facilities. A team of engineers is addressing these challenges. Alternative and optimum location options are currently being assessed and it is likely that decisions will be made in the next few weeks.
Recent Contracts Awarded and Orders Placed
To date contracts totaling approximately US$91M have been awarded.
The largest contract awarded during the period was the concrete contract which was awarded on 4 February and has a value of US$14M. The contractor will mobilize when the plant facilities configuration is confirmed.
Over the past 3 months, a number of equipment items have been awarded as well as procurement of vendor data, including the sump pumps, slurry pumps, solution pumps, fire pumps, gold room equipment, valves, poly tanks and agitators.
Exploration, Resources and Reserves
Exploration activities have continued, with four rigs active on near mine drilling, and regional teams focused on programmes in other parts of the COW. These activities and results will be the subject of a detailed announcement in April.
The Barani Reserve statement is issued under a separate announcement of today?s date and can also be sourced on the G-Resources website. In summary, G-Resources has delineated an initial Ore Reserve at the Barani deposit of 4.5 million tonnes at 1.6 g/t gold and 2.8 g/t silver for 225,000 ounces of gold and 412,000 ounces of silver.
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 (Figure 1). 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 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 release)