Sumatra gets loan for Tembang development

By Puspita Maylana Devi

ASX-listed Sumatra Copper & Gold Plc recently announced it has reached agreement for a comprehensive debt and equity package of A$63 million to develop its 100% owned Tembang gold-silver project in South Sumatra.

The funding package is to be provided by major shareholder and cornerstone investor, Provident Capital Partners Pte Ltd, an Indonesian investment group that has 26 percent stake in Sumatra, and is comprising of three components, namely a fully underwritten placement of 38 million Sumatra CHESS Deposit Interests (CDI?s) to raise A$8.36 million, with Provident agreeing to take up the full placement but having the right to allot some of these CDIs to other long-term Indonesian-based investors; a one for three pro rata non-renounceable entitlements offer, to be undertaken in April/May 2013 to raise approximately A$20 million; and USD35 million project funding from Credit Suisse AG.

"The signing of the in-principle agreements with Provident follows the announcement that Sumatra has received credit approval from Credit Suisse AG for USD35 million in senior debt finance facilities to cover the debt funding requirements of the project. The agreements with Provident are subject to final documentation, which the company is in the process of preparing," Sumatra said in a statement made available at the exchange.

The placement of 38 million CDI?s to raise A$8.36 million will allow the repayment of the A$5 million Macquarie debt facility plus approximately $0.5 million in interest which has accumulated over the past year and is due at the end of March 2013. The remaining funds plus the existing cash reserves of approximately A$5 million, will allow Sumatra to maintain the current project development schedule ahead of the final forestry permit expected at the end of March 2013.

Under the terms of the USD35 million debt facility with Credit Suisse previously announced, Sumatra is required to raise a minimum $20 million in equity and complete the final forestry permitting process. This equity funding package will thus clear the way for financing and development of the Stage 1 Tembang Project to proceed, which involves total pre-production capital of USD40 million, is scheduled to produce 30,000oz per annum of gold and 200,000oz per annum of silver at a forecast C1 cash cost of USD487/oz. Stage 1 Production is scheduled to commence in 2014. Stage 2, which is planned to commence in 2015, will see production expand to 50,000oz per annum of gold and 500,000oz per annum of silver.

Editing by Er Audy Zandri