Study confirms low costs, robust economics of Tembang project
Wednesday, April 23 2014 - 04:15 AM WIB
ASX-listed Sumatra Copper & Gold plc announced Wednesday the completion of an updated definitive feasibility study (DFS) for the Tembang gold and silver project in Bengkulu province, confirming it as a low cost operation with a robust mine production profile.
The DFS is based on a five-year plan mining Ore Reserves at a nameplate plant throughput rate of 400,000 tons per annum (tpa) to produce a total of approximately 169,000 oz of gold and 1.8 million oz of silver. The DFS builds on the 2012 stage 1 definitive feasibility study and the Tembang construction activities to date, the company said in a statement.
Over the past 6 months the company has undertaken a revision of the development plan and underlying business case for the Tembang Project in response to the volatility in the gold market experienced since April 2013. Extensive in-fill drilling programs have been completed at key deposits at the project culminating in the publication of updated ore reserves, compliant with the JORC Code (2012 Edition), on 25 March 2014.
Construction activities at Tembang were suspended in December 2013 pending the updated ore reserves and DFS completion.
The DFS, using a gold price of US$1,300/oz and silver price of $20/oz, demonstrates the viability of a robust, low-cost operation at a competitive forecast C1 cash operating cost of $470/oz (net of silver credits US$212/oz) and all-in sustaining cost (AISC) cost of $745/oz (net of silver credits of US$212/oz), Sumatra Copper said.
The DFS production and financial forecasts have assumed the recommencement of construction in mid-2014 for a mid-2015 commencement of production.
Sumatra?s Managing Director, Julian Ford, said the successful completion of the DFS was a major milestone for the company, paving the way for it to join the ranks of gold producers next year.
?We are now focused on completing the funding package of debt and equity to allow us to recommence construction,? Ford said.
He further said that the revised DFS 5-year mine plan for Tembang provides low operating costs and a robust production profile able to withstand significant fluctuations in the gold price. ?It is also important to note that the Tembang Project provides a number of exciting organic growth opportunities beyond the 5-year life defined by existing ore reserves. These include drill-indicated underground opportunities at several of the open pits and multiple exploration targets which we intend to pursue once production has commenced,? he explained.
?We are targeting completion of financing and recommencement of construction b mid-2014 with production targeted for mid-2015 which would mark a significant milestone for our shareholders and all of our stakeholders in Indonesia, who have been extremely patient and supportive throughout this process,? he ended.
| Description | Unit | Total(1) | Pre 2015 | 2015 | 2016 | 2017 | 2018 | 2019 | 2020 |
| Ore mined | Kt | 2,080 | 9 | 398 | 430 | 688 | 287 | 268 | - |
| Recovered ounces | Au oz | 168,795 | - | 39,936 | 44,061 | 36,958 | 24,664 | 19,703 | 3,473 |
| Ag oz | 1,786,130 | - | 362,974 | 347,325 | 390,609 | 315,796 | 317,829 | 51,597 | |
| Revenue | US$M | 255.2 | 0.0 | 59.2 | 64.2 | 55.9 | 38.4 | 32.0 | 5.5 |
| Operating costs | US$M | (115.1) | 0.0 | (26.0) | (31.5) | (24.3) | (17.3) | (13.5) | (2.5) |
| Royalties | US$M | (9.4) | 0.0 | (2.2) | (2.4) | (2.1) | (1.4) | (1.1) | (.2) |
| Full Capital | US$M | (71.3) | (48.6) | (13.3) | (4.4) | (2.2) | (1.5) | (1.0) | (.3) |
| Net cash flow (full Capital) | US$M | 59.4 | (48.6) | 17.7 | 25.9 | 27.3 | 18.2 | 16.4 | 2.5 |
| Sunk capital to date | US$M | 19.5 | 19.5 | - | - | - | - | - | - |
| Net cash flow (excluding sunk Capital) | US$M | 78.9 | (29.1) | 17.7 | 25.9 | 27.3 | 18.2 | 16.4 | 2.5 |
| Return metrics (pre-tax) | NPV (9% discount rate) US$M | IRR % |
| Full Capital Cost | 33.8 | 34 % |
| Excluding Sunk Capital | 52.8 | 65 % |
Editing by Reiner Simanjuntak