Straits: Mt Muro gold mine outlook

The following is an edited excerpt from Straits Asia Resources on Mount Muro, Central Kalimantan gold project, taken from the annual report ended June 30, 2009 released on Wednesday.

Mt Muro, Central Kalimantan
Straits ? Contract of Work 100%

Outlook
Significant capital works on the plant were undertaken in the 2009 reporting period, including the installation and commissioning of a coal fired power station delivering 2.6 MW to mitigate future diesel fuel price risk.

Extensive review and mine planning was conducted during the 2009 reporting period with a view to determining the future development and operation of Mt Muro. As a result of this work, Straits has committed to a production and capitalisation plan based around the cutback and mining of the Serujan open pit, mining of the Berinjin / Merindu eluvial deposits and development and operation of the Soan deposit, which is forecast to deliver 320,000 recovered gold equivalent ounces over a minimum five year time frame.

Access to the Berinjin / Merindu eluvials has been negotiated with the Indonesian Government as part of a strategy of increasing local involvement. Ore will be mined on a contract basis by the local government mining company and delivered to the processing plant on commercial rates. A Memorandum of Understanding has been executed to this effect and final agreements are well advanced.

Integral to this plan is the decision to recapitalise the mining and transport fleet and moving to owner operated mining during the second half of 2009.

Under this plan, it is expected that in excess of 68,000 gold equivalent ounces will be produced in the next financial year at an average target cash operating cost of approximately US$620 per ounce and reducing thereafter.

Mt Muro remains an operating gold mine in one of the most prospective gold magmatic arcs in Asia, with an extensive installed capital base. Pre-mining gold inventory now exceeds 2 million ounces, and while exploration was curtailed in recent years due to financial constraints, grass roots exploration has historically been very effective in generating targets and delivering gold resources and reserves. Some 600,000 ounces of gold was discovered during the period 2003 to 2006. The chemical and structural controls that determine gold accumulation at Mt Muro are now well understood and Straits is about to embark on an extensive induced polarisation programme to provide deeper visibility within the various structural corridors. This should deliver the next generation of future ounces to support Mt Muro?s longer term inventory build-up. (end of edited excerpt)

Editor?s note:
Straits operates the 47,940 hectares Mt Muro Gold Project under a 3rd Generation Contract of Work (CoW) agreement with the government of the Republic of Indonesia signed in 1985.

Mt Muro sold 48,367 ounces of gold and 297,558 ounces of silver for the 2009 financial year.