Sumatra Copper, Newcrest sign joint investment deal

Australian mining firm Newcrest Mining Limited and Sumatra Copper & Gold plc (Sumatra) announced on Wednesday they have signed a legally binding agreement for an equity investment by Newcrest in Sumatra and a joint venture investment in two of Sumatra?s gold projects in the southwest region of the Island of Sumatra following the previously Heads of Agreement (HoA).

The agreement sets out the proposed principal terms in which Newcrest can: (1) Subscribe for an initial 7.1% stake in Sumatra for A$2.5 million comprising 10 million shares at A$0.25 per share and 10 million attaching options, each exercisable to acquire one share for A$0.38 over an 18 month period. If fully exercised, Newcrest's interest in Sumatra would increase to 13.2%, (2) Earn a 70% interest in Sumatra?s Tandai Project by spending US$12 million over 5 years, with a minimum commitment of US$1.75 million over the first 18 months, (3) Provide a down-payment of US$500,000 for an option to acquire a 25% interest in Sumatra?s Tembang Project for US$10 million, exercisable at any time until March 31, 2011.

The joint venture investments are also dependent on approvals by Indonesian authorities.

Tandai and Tembang are exploration projects centred on extensive epithermal gold systems in large exploration and mining licences.

Tembang is a relatively advanced project and has a current JORC compliant Mineral Resource comprising 1.64 million ounces of gold and 19.8 million ounces of silver. The funding from the share placement will enable further testing for high grade gold ore shoots at depth at Tembang with a view to transforming that project into a high yielding high grade proposition. The earn-in agreement for Tandai facilitates immediate detailed exploration of this project. (denny)