Release: Oropa: Positive scoping study results-Pungkut gold project
Thursday, November 27 2008 - 04:52 AM WIB
Summary of Scoping Study assumptions and results
| Nominal Plant Throughput | 1 Mtpa |
| Mineral Resources Scheduled | Inferred Resources |
| Expected Mine Life | 10 years |
| Total mineralised inventory processed | 10.1 M tonnes |
| Expected Head Grade | 2.43 g Au/t |
| Expected Gold recovery | 80% |
| Average Annual Production | 63,000 tr. ounces |
| Stripping Ratio (t waste: t mineralised inventory) | 3.8 : 1 (t/t) |
| Unit Cost per Tonne of mineralised inventory treated | US$28.22/t |
| Cash Operating Costs per troy ounce of gold | US$442/tr.oz |
| Gold price per troy ounce of gold | US$800/tr.oz |
| Indicative pre-tax Net present value (NPV) (discount rate of 10%) | US$50.3 million |
| Pre-tax IRR | 25.8% |
Operating Costs
The Scoping Study has factored in the significant operating cost pressures faced by the industry in recent times. Even allowing for these high costs, estimated production costs at Pungkut compare favourably with recently announced costs from three of the world?s largest gold producers, Barrick, Newmont and AngloGold-Ashanti, which reported September quarter production costs of US$466/oz, US$480/oz and US$486/oz respectively.
Scoping Study Parameters
SRK was commissioned by Oropa to conduct a Scoping Study assessment on the Sihayo 1 North and Sambung Inferred Mineral Resources which contain a combined 13.2 Mt at 2.4 g Au / t for 1.01 Moz of contained Au. (Table 2). It should be noted that the Scoping Study is based on an Inferred Mineral Resource only and therefore the results must be interpreted cautiously.
Inferred Mineral Resources can not be converted into Ore Reserves according to the 2004 JORC Code guidelines.
Sihayo 1 North and Sambung Mineral Resources
| Project | Inferred Mineral Resources (Million Tonees) | Grade (g/t gold) | Contained Gold (Million ounces) |
| Sihayo 1 North | 12.1 | 2.4 | 0.91 |
| (+1.0 g/t cut-off grade) | |||
| Sambung | 1.1 | 2.6 | 0.10 |
| (+1.5 g/t cut-off grade) | |||
| Combined Inferred Resource | 13.2 | 2.4 | 1.01 |
The Scoping Study used the Whittle?s? pit optimisation software for pit optimisation and indicative scheduling, on pit shells only, with an assumed gold price of US$800 per troy ounce. Mining operating costs, treatment operating costs and capital expenditure were estimated by SRK. Processing plant capital expenditure is based on using new plant and equipment. Oropa believes the capital expenditure can be significantly reduced by using reconditioned plant and equipment. Power costs were supplied by Oropa based on costs of similar operations in North Sumatra.
Mining and Processing
The Sihayo 1 North and Sambung pits will be mined using open pit mining, with drill and blast methods. The mining fleet will be4owned and operated by a mining contractor.
Indicative production scheduling by SRK aimed at providing 1 million tonnes of mineralised inventory per year to the process plant, produced a 10 year life of mine schedule with an average stripping ratio of 3.8 to 1. Processing will be conducted with crushing, grinding, and conventional leaching using CIP. Metallurgical testing undertaken to date indicates an 80% recovery should be achievable.
Capital Costs
SRK has estimated the total capital expenditure for new equipment and infrastructure at US$75.6M, which includes owners? costs, an allowance for contingencies and working capital.
Oropa?s directors believe there is considerable scope for optimisation of SRK?s projected capital expenditure which would lead to a materially lower total initial capital outlay than assumed in the Scoping Study. Specific factors supporting this are;
? The Australian dollar exchange rate has fallen to 63 cents from 85 cents (-26%) against the US dollar since the Scoping Study assumptions were locked in.
? The Indonesian Rupiah has fallen to 12,000 per US dollar from 9,000 per dollar (-25%) since the study assumptions were locked in.
? Oropa and PT Sorikmas Mining?s management consider that local Indonesian construction costs for access roads, general infrastructure, construction of tailings dam and the fabrication of site buildings will be significantly lower than SRK assumptions.
? Fully equipped and refurbished second hand mills and treatment plants are currently available in the market ready to be shipped at approximately 50% of the SRK estimates for the concentrator capital.
Based on these factors, it is likely that the final capital expenditure could be reduced to between US$40m and US$50m prior to contingencies, but including all owners? costs and working capital.
At present, the above capital expenditure scenarios are indicative and actual capital expenditure would not be established until the completion of a Bankable Feasibility Study.
Future Development
SRK concludes that ?If the many assumptions used are representative of the deposit, then the project would appear to be both technically and economically feasible. More security would be given by a longer life.?
The positive results of the Scoping Study clearly support continued exploration and development efforts at Pungkut. Priorities will be conversion of the existing Inferred Mineral Resources at Sihayo 1 North and Sambung to a higher classification of Mineral Resources through infill drilling.
Recent drilling results at the newly discovered ?Old Camp Area? indicate there is a strong likelihood of further mineralisation being discovered at Sihayo 1 North. If further mineralisation is discovered it will create an opportunity to extend the assumed 10 year mine life. Alternatively additional gold inventory might be used to support a larger mill size and higher annual gold production. (end of edited release)