Sumatra Copper & Gold updates Indonesian projects
Wednesday, April 30 2014 - 03:22 AM WIB
Overview
The March 2014 Quarter was a pivotal period for Sumatra, with the Company completing extensive resource development drilling programs required to update its Mineral Resource and Ore Reserve inventory for the flagship Tembang Gold-Silver Project located in Sumatra.
The updated Mineral Resource and Ore Reserve estimates were completed in accordance with the JORC (2012 Edition). Historical Reverse Circulation (RC) drilling on key Tembang deposits was replaced by diamond drilling to ensure more robust geological models and resource estimation.
These activities were key to re-optimising the Tembang Life-of-Mine Plan (?LOM?) and completing a new Definitive Feasibility Study (?DFS?).
A relatively conservative gold price of US$1,100 per ounce gold was used in the determination of Ore Reserves, with the global major and mid-tier producers using a price range of US$1,100 to US$1,300 per ounce with a median price of US$1,250/oz. The LOM plan is based on Ore Reserves only.
Subsequent to the end of the March 2014 Quarter, the Company completed and published the revised Definitive Feasibility Study (DFS) on 23 April.
The Company is now focused on completing negotiations and finalising the credit approval process for the proposed debt funding component of the Tembang Project, prior to completing the total funding package, with the objective of recommencing project construction subject to full funding being received.
Over the past six 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.
The DFS is based on a five-year plan mining Ore Reserves at a nameplate plant throughput rate of 400,000 tonnes per annum (tpa) to produce a total of 169,000oz of gold and 1.8Moz of silver. A full copy of the DFS announcement is available on the Company?s website.
1.1 Corporate Activities
The Company Convertible Loan Facility (?CLF?) announced on the 4th December 2013 was fully drawn-down during the March Quarter.
On 13 March 2014, the Company announced that Provident Capital Partners Pte Ltd has assigned half the CLF to PT Saratoga Investama Sedaya. The first US$2.5 million of this facility was drawndown during December 2013.
1.2 Community Relations
PT Dwinad Nusa Sejahtera, holding company which owns the Tembang Project, received an official ?clean and clear? certificate from the Ministry of Energy and Mineral Resources (?ESDM?) on 11 March 2014. While this process was a formality, this certificate is an important part of the final permitting process for the development of the Tembang Project.
The Company continues to work closely with the local authorities. During the Quarter, a full delegation from the newly created local Regency, Musi Rawas Utara, including the newly appointed Bupati, Pak Akisropi Ayub, and his Mining and Forestry department heads visited the Tembang Project site.
In addition, the Company?s local Community Relations Manager was appointed to the position of General Secretary of the "Sumatera Regional Forum on Forests Land Reclamation?.
The Company is also please to inform its shareholders that the general election for members of Indonesia?s parliament was completed in a peaceful and efficient manner on 9 April 2014, which demonstrates the maturity of Indonesia?s democracy and relatively new constitutional reforms.
1.0 Mineral Resource & Ore Reserve Estimates in Compliance with JORC Code 2012
1.1 Resource Estimates
The Company announced updates to the Mineral Resource estimates for the Asmar, Tembang-Anang and Bujang deposits in March. This brings all the Mineral Resource estimates in-line with the 2012 JORC reporting requirements.
A.1 Berenai
Resource Category |
Tonnes |
Grade Au g/t |
Grade Ag g/t |
Gold (oz) |
Silver (oz) |
Indicated |
1,546,500 |
2.2 |
34.9 |
108,700 |
1,735,600 |
Inferred |
322,500 |
1.4 |
25.6 |
14,100 |
265,500 |
Total |
1,869,000 |
2.0 |
33.3 |
122,800 |
2,001,100 |
A.2 Asmar
Resource Category |
Tonnes |
Grade Au g/t |
Grade Ag g/t |
Gold (oz) |
Silver (oz) |
Indicated |
1,636,000 |
1.2 |
20.6 | 64,300 |
1,081,800 |
Inferred |
1,509,000 |
1.4 |
11.9 |
67,700 |
577,200 |
Total |
3,145,000 |
1.3 |
16.4 |
132,000 |
1,659,000 |
A.3 Tembang/Anang
Resource Category |
Tonnes |
Grade Au g/t |
Grade Ag g/t |
Gold (oz) |
Silver (oz) |
Indicated |
170,000 |
2.5 |
29.3 |
13,700 |
160,400 |
Inferred |
56,000 |
2.1 |
29.9 |
3,800 |
53,300 |
Total |
226,000 |
2.4 |
29.4 |
17,500 |
213,700 |
A.4 Bujang
Resource Category |
Tonnes |
Grade Au g/t |
Grade Ag g/t |
Gold (oz) |
Silver (oz) |
Indicated |
204,000 |
2.8 |
38.7 |
18,600 |
254,300 |
Inferred |
68,000 |
2.0 |
20.0 |
4,400 |
43,500 |
Total |
272,000 |
2.6 |
34.0 |
23,000 |
297,800 |
The Mineral Resource updates for the Asmar, Bujang, Berenai and Tembang-Anang deposits were completed by Cube Consulting. Mineral Resources estimates for Belinau and Buluh were reported under the 2012 guidelines in December 2013.
1.2 Ore Reserve Update
The updated Ore Reserves for the Tembang Project were published on 25 March 2014. The updated Ore Reserve estimation was completed in accordance with the guidelines of the JORC Code (2012 Edition) using a price of US$1,100 per ounce for gold and US$20 per ounce for silver.
| Deposit | Ore Reserve
Category |
Tonnes
('000t) |
Grade
Au (g/t) |
Contained
Gold (oz) |
Grade
Ag (g/t) |
Contained
Silver (oz) |
Open Pit Reserves |
||||||
| Asmar | Proved | - | - | - | - | - |
| Probable | 733 | 1.6 | 38,000 | 24.8 | 585,000 | |
| Berenai | Proved | - | - | - | - | - |
| Probable | 710 | 2.2 | 51,000 | 31.8 | 726,000 | |
| Bujang | Proved | - | - | - | - | - |
| Probable | 56 | 3.7 | 7,000 | 57.2 | 102,000 | |
| Siamang | Proved | 4 | 7.8 | 1,000 | 102.8 | 12,000 |
| Probable | 31 | 1.6 | 8,000 | 61.6 | 61,000 | |
| Tembang Anang | Proved | - | - | - | - | - |
| Probable | 59 | 1.6 | 3,000 | 31.1 | 59,000 | |
| Total Open Pit | Proved | 4 | 7.8 | 1,000 | 102.8 | 12,000 |
| Probable | 1,588 | 2.1 | 106,000 | 30.0 | 1,534,000 | |
| Total | 1,592 | 2.1 | 107,000 | 30.2 | 1,546,000 | |
|
Underground Reserves |
||||||
| Belinau | Proved | 204 | 6.0 | 39,000 | 41.5 | 272,000 |
| Probable | 214 | 5.1 | 35,000 | 44.4 | 306,000 | |
| Total | 418 | 5.5 | 74,000 | 43.0 | 578,000 | |
|
Total Reserves 2014 |
||||||
| Tembang | Proved | 208 | 6.0 | 40,000 | 42.5 | 284,000 |
| Probable | 1,802 | 2.4 | 141,000 | 31.7 | 1,839,000 | |
| Total | 4,010 | 2.8 | 181,000 | 32.9 | 2,123,000 | |
| Calculations have been rounded to the nearest 1,000 t, 0.1 g/t grade and 1,000 oz. metal | ||||||
1.3 Comment on the Tembang Drill Database
The Tembang Project has nearly 183km of drill holes in more than 1,800 drill holes. This is a major asset for the Company and would cost an estimated US$25-40 million, in current dollars, to reproduce from inception.
In 2013, the Company took a major strategic decision to discard the RC drill database from its calculation of Measured and Indicated Mineral Resources. The majority of the RC drilling came from the BRM database acquired in 2008.
Over the past year, the Company has drilled more than 200 drill holes for nearly 20,000m. This drilling has primarily been focused on the Belinau Underground and the open pit, in-filling drilling the mineralisation defined by the whittle pits using a US$1,100 gold price to Measured and Indicated Mineral Resource status.
The Company remains optimistic at the potential to effectively add to the Mineral Resource and Ore Reserve estimates, particularly where there is significant underground potential as highlighted in the now extensive Tembang database.
2.0 Tembang Development Drilling and Exploration
2.1 Development Drilling
The Company completed a Mineral Resource definition and geotechnical drilling program (Phase 3) during the Quarter with the objective of increasing Mineral Resources and Ore Reserves at the Tembang Project. A total of 79 drill holes for 6,985m were completed.
The program achieved all of its objectives, which were to ensure full compliance with the JORC Code 2012; to convert Mineral Resources to Ore Reserves within optimised pits; to increase the Ore Reserve base to support a 5-year life-of-mine plan; and to improve the Tembang Project?s debtcarrying capacity.
The historical RC drilling in the key deposit areas of Anang Tembang, Asmar, Bujang and Berenai was replaced by diamond drilling resulting in more robust geological models and resources.
The RC drilling data also highlights significant potential to expand resources in multiple areas, both in the open pits and also by underground extensions.
Berenai
The recently completed Phase 3 drill program at Berenai was designed to upgrade the Mineral Resource estimate to be in full compliance with JORC Code 2012 by replacing historical RC drilling with diamond drilling and increasing drill density where required to ensure minimum Indicated Mineral Resources were achieved within a nominal whittle pit shell optimised at US$1,000/oz Au on the 2011 Mineral Resource model.
At Berenai, 24 drill holes have been completed for a total of 2,407.5m. The drilling program successfully targeted mineralisation around the southern shoot plunging to depth along the main Berenai structure and infill drilling along both the Central and Nuri structures.
The shoot is open well below the current pit limits and has the potential for additional high-grade resource additions.
Asmar
At Asmar, the Phase 3 drill program targeted conversion of Inferred Mineral Resources to Indicated Mineral Resources category. The program also targeted the extension high-grade shoots at the periphery of the previously outlined LOM pit. Six drill holes were completed for a total of 354.8m intersecting typical low-to-moderate grade mineralisation hosted by quartz veining, stock work and shear zones with sporadic higher grades encountered within individual veins.
Anang/Tembang
The objective at Tembang-Anang was to complete a JORC Code 2012 compliant Mineral Resource model and estimate based on 100% diamond drilling.
The drill program was designed to convert Mineral Resources within a nominal whittle pit shell optimised at US$1,000/oz Au based on the 2011 Mineral Resource model. The drilling targeted conversion of shallow Mineral Resources along a well-constrained quartz vein lode.
23 drill holes were completed for a total of 1,350m confirming the Tembang vein to be generallyconsistent in width and grade along its entire 225 metre strike length and is open at depth and along strike to the south-east. During the drilling program the northern extension of the Asmar vein systems was identified which has returned consistent results at the intersection with the Tembang vein system.
Bujang
The objective of the recent drill program at Bujang was to complete a JORC Code 2012 compliant Mineral Resource model and estimate based on 100% diamond drilling.
The drill program was designed to convert Mineral Resources within a nominal whittle pit shell optimised at US$1,000/oz Au based on the 2011 Mineral Resource model. The drilling targeted conversion of shallow Mineral Resources along a well-constrained quartz vein lode.
Seven Mineral Resource definition drill holes for 752.7 metres and three geotechnical holes for 278.3 metres were completed. Results of the drill program confirmed continuous mineralization along the entire length of the deposit except on the northernmost section where drilling has effectively closed off mineralization in this direction. Drilling to the south of the deposit intersected high grades and remains open to the southwest.
Siamang and Belinau
No updates have been made to the Siamang and Belinau Mineral Resources as the Company chose to restrict the additional drilling at these projects during the recent drilling campaign. The Siamang deposit was previously reported as part of the Buluh deposit, although it is currently expected that only the Siamang deposit will be considered as a potential open pit mine.
Both the Belinau and Buluh Mineral Resource estimates were updated and were reported to the ASX on 4 December 2013 and are considered compliant with the JORC Code (2012 Edition).
2.2 Tandai Exploration
The Tandai Project is located within the northern part of the Bengkulu Utara IUP, in the Kabupaten area of Bengkulu Utara, approximately 100km north of Bengkulu. No material work was carried out in the Tandai Joint Venture (?Tandai JV?) during the quarter.
The Company is in the final stages of negotiating the buy-out of Newcrest interest in the Tandai JV. Under the terms of the Tandai JV agreement; the Company has the right to acquire Newcrest?s original 100% interest in the Tandai JV for a cost of one hundred US dollars. (end of excerpt)