Sumatra kicks off construction of Tembang gold project

By Ruli Setiawan

ASX-listed Sumatra Copper & Gold plc announced Thursday that mobilization of the construction team for its Tembang gold and silver project in southern Sumatra has commenced following the drawdown of a US$40 million loan.

Production is expected within 12 months of project recommencement, the company said in a statement.

The project will be constructed under a local engineering and procurement contract. A Project Manager and Construction Manager, each with significant project expertise in gold plant construction in developing countries, have been appointed, it added.

?Draw down of the Tranche 1 US$40 million, net of transaction costs and first year interest of US$3 million, of the Senior Secured Debt Facility with Nomura Singapore Limited and Indonesia EximBank, has been completed and warrants have been issued to Nomura in accordance with the terms of the facility,? Sumatra Copper & Gold said.

The company?s subsidiary PT Dwinad Nusa Sejahtera signed last month a senior secured debt facility of up to $45 million with Nomura and Indonesia Eximbang to fund the commercial development of the Tembang project.

The second tranche of $5 million is expected to be available on the date of practical completion of the process plant, provided that completion takes place within 12 months of the date of drawdown of the tranche 1. The gold price must be above US$1,125 per ounce at the proposed date of drawdown for tranche 2 to be drawn, according to the key terms of the loan facility.

Editing by Reiner Simanjuntak