ASX Announcement 31 July 2013

Transcription

1 ASX Announcement 31 July 2013 QUARTERLY ACTIVITIES REPORT For three months ended 30 June 2013 Construction and optimisation work underway at Tembang as development gathers momentum Highlights Tembang Project Development Final Borrow & Use (Pinjam Pakai) Forestry Permit awarded in April. Significant progress achieved with other project permitting. Final equipment orders placed for processing plant construction with the first key offshore equipment component completed ahead of schedule and dispatched from Australia to Indonesia. Early construction progress at site included commencement of onsite plant construction following the delivery of leach tank plate steel and construction of the 300-man camp, now 80% complete. Optimisation studies and the revised Stage 1 mining plan progressing well, with a further update to be announced in the September Quarter. The Optimisation Study has been designed to reduce cash costs, extend the Stage 1 Ore Reserve base and enhance project economics in a lower gold price environment. Exploration New zone of high-grade mineralisation named Bitu discovered adjacent to the Belinau underground deposit at Tembang, with hits of up to 13g/t gold. The mineralisation could be readily and economically accessed from the planned decline at Belinau. Drilling resumed at Bitu in late July to test the potential of the highgrade zone, which remains open both along strike and at depth. Corporate $20M rights issue closed with a strong take-up by shareholders of more than 60% ($12M). The issue was fully sub-underwritten by the Company s major shareholder and cornerstone investor, Provident Capital Partners Pte Ltd. Directors Warwick Morris Non-Executive Chairman Julian Ford Managing Director and CEO Adi Sjoekri Executive Director Jocelyn Waller Director (Non-Executive) Steve Robinson Director (Non-Executive) Contact Level 1, 5 Ord Street West Perth 6005 Western Australia T: E: info@scgplc.com Registered in England and Wales Registered address 39 Parkside, Cambridge United Kingdom CB1 1PN Registered Number ASX Code: SUM Proceeds from the rights issue will be used to develop the Tembang Gold-Silver Project, and for working capital purposes. Board and senior management team further strengthened with the appointment of former Barrick Gold (Australia) Director of Business Development Steve Robinson as a Non-executive Director and experienced corporate executive David Fowler as Chief Financial Officer.

2 Overview The June Quarter was characterised by continued volatility and uncertainty in global equity and commodity markets, with most key resource equity benchmarks declining significantly and the price of many commodities including gold and silver falling sharply. However, Sumatra Copper & Gold plc ( Sumatra or the Company ) continued to outperform many of its peers. This is a reflection of the quality of the Company s flagship asset, the Tembang Gold-Silver Project in Indonesia, the strength of its share register, and the advanced nature of its project funding and development plans. As reported in the March 2013 Quarterly Report, as part of the project funding process Sumatra has secured the backing of Provident Capital Partners Pte Ltd, a powerful and respected Indonesian investment group, together with other strategic co-investors and other cornerstone shareholders based in Indonesia and elsewhere in Asia and Europe. This strong shareholder base was instrumental in ensuring the success of the $20 million rights issue undertaken during the Quarter following receipt of the final project permit the Pinjam Pakai Forestry Permit for the Tembang Project in April This rights issue closed with a strong take-up by shareholders of some 60%, which is considered an outstanding result in the current market. The shortfall was placed with the underwriter, Patersons Securities Limited, resulting in gross proceeds of $20 million. The Company s cash position at the end of the Quarter was $19 million, with construction and development activities at Tembang already in progress. As outlined in the March Quarterly Report, Sumatra has initiated a series of optimisation studies to further de-risk the Tembang Project both in terms of the volatile gold price environment and project economics. In light of the fall in the gold price during the Quarter, the Company decided to investigate a revised mining strategy based on mining the Buluh and Asmar deposits in the Stage 1 Development. In addition, as a result of favourable geotechnical results, the Company decided to progress Belinau as an underground mine from the outset rather than commencing with an initial pit cutback. The key benefits of the revised mine plan are expected to be substantially improved cash flow in the first two years of production and lower cash costs, which would in turn translate into a significant improvement in project economics at current gold and silver prices. During the Quarter, the Company completed the environmental, geotechnical and geo-hydrological assessment of the Buluh deposit required to upgrade the deposit to Bankable Feasibility Study (BFS) status. The assessment has confirmed that the Buluh mine plan will meet these higher technical standards required for BFS status. As result of the optimised mining strategy, a 2,000m in-fill drilling programme has commenced to upgrade the Inferred Resource at Buluh to Measured and Indicated status to allow a fully optimised Ore Reserve and mine plan to be developed. The first stage of this drilling programme is scheduled for completion in July In addition, composite and additional variability samples have been despatched for metallurgical assessment. As Buluh was partially mined during the previous 2

3 production period at Tembang with excellent metallurgical performance, no adverse metallurgical results are expected. A new high-grade gold discovery (Bitu) adjacent to the Belinau deposit at Tembang has highlighted the significant exploration upside at the project. The new zone should be accessible from the planned underground infrastructure at Belinau and further drill testing of the discovery will commence during the September Quarter. Subsequent to the end of the Quarter, the Company announced two key appointments, further strengthening its board and senior management team in the lead-up to construction and production. Mr Steve Robinson, an experienced mining executive, has joined the Board as a Non-executive Director. Mr David Fowler, an experienced corporate executive, has joined the Company as its Chief Financial Officer. 1.0 Tembang Project 1.1 Project Development Funding As outlined last Quarter, Sumatra has put in place comprehensive in-principle debt and equity funding arrangements to fund the development of the Tembang Project. The funding package comprises three components: a placement of 38 million Sumatra CDI s to the Company s major shareholder and cornerstone investor, Provident Minerals Pte Ltd, to raise A$8.36 million. This placement was completed in March 2013; a fully underwritten pro rata non-renounceable entitlements offer, undertaken in May/June 2013, to raise ~A$20 million; and US$35 million of in-principle project funding from Credit Suisse AG ( Credit Suisse ), incorporating a US$30 million senior debt finance facility as well as US$5 million of cost overrun funding. 1.2 Rights Issue During the Quarter, Sumatra completed a highly successful $20 million rights issue, undertaken on a two-for-five basis, following the award of the Final Forestry Permit for Tembang. The issue was fully sub-underwritten by the Company s major shareholder and cornerstone investor, Provident Capital Partners Pte Ltd. The Offer opened on 22 May 2013 and closed on 5 June 2013 with a strong take-up by shareholders of more than 60 per cent. At the closing date, Sumatra received applications for approximately $12.1 million (71.1 million CDI s) from shareholders. A total of million CDI s were offered under the rights issue. The Company arranged for the balance of the underwritten amount ($7.9 million or 46.8 million CDI s) to be taken up by the Underwriter, Patersons Securities Limited. Sumatra subsequently allotted and dispatched the remaining shortfall CDI s to the underwriters, resulting in gross proceeds to the Company of $20 million. 3

4 Holding statements for the new securities were dispatched on 13 June and trading of the new CDI s commenced on 14 June Following completion of the rights issue, Sumatra has 412,540,645 shares and 59,881,332 unquoted options on issue. 1.3 Senior Debt Facility On 21 February, Sumatra received credit approval from Credit Suisse for US$30 million in senior debt finance facilities to fund the commercial development of the Tembang Project, as well as up to US$5 million of cost overrun funding. Credit Suisse was appointed following a competitive process conducted by Sumatra s debt advisors, Optimum Capital Pty Ltd. Provision of the in-principle US$30 million senior debt facilities is subject to completion of the project finance documentation and conditions precedent customary for a financing of this nature. These include final approval of the company s Forestry Permit, which was received on 26 April 2013, and the completion of the entitlements issue component of the funding package outlined above. The Company intends to conclude the debt financing arrangements once the final optimised mine plan is completed. This is scheduled for late in the September quarter. 1.4 Permitting Forestry The Company was granted a Borrow and Use (Pinjam Pakai) Forestry Permit for its wholly owned subsidiary, PT. Dwinad Nusa Sejahtera (DNS). The permit is valid for 19 years or until 4 April Following the grant of the Pinjam Pakai, a team of Planology Forestry Officers from the Department of Forestry in Jakarta carried out a forestry inspection at the Tembang Project site during the Quarter. The site inspection related to the fulfilment and obligations of the Borrow and Use (Pinjam Pakai) Forestry Permit. In compliance with its obligations, the Company has now established a Forestry Patrol Post at the Tembang site Access Road Permit The Company received permission from the local government to upgrade and repair the local Simpang Empat bypass road, which it has now carried out. This will provide significantly improved access while simultaneously reducing the accident risk for site access Custom Registration Permit The Directorate General of Customs and Excise has issued customs registration number (NIK) for PT. Dwinad Nusa Sejahtera. This has allowed the Company to process importation of goods and materials. Further work is in progress to complete the master list form in order to apply for an import facility from the Government Environmental Permit A meeting was held during the Quarter with the Environmental Agency BLHD Musi Rawas to discuss the plan for de-watering the Belinau pit. It has been agreed the the existing water in the pits is not classified as a Waste Water but as rain water accumulated following the previous mining 4

5 operation. The BLHD will issue a recommendation letter for de-watering following water sampling conducted to collect baseline data Explosives Permit The Dinas of Mines has issued an explosive storage location permit. This has allowed the Company to commence the construction of the explosive storage building prior to further obtaining initial Explosive Permit for Storage Location by the Bupati of Musi Rawas, and the approval of Explosive purchase by the Police Department Expatriate Work Permit The Company has processed an update to its application to enable it to recruit 15 expatriates to obtain work permits for Indonesia. This includes the four expatriate positions, which were approved initially, plus a further seven positions. All required documentation for these applications has been submitted to the Director-General of Mining and Coal with recommendation for approval. 1.5 Tembang Construction Detailed Engineering Design The detailed design of the process plant progressed on schedule during the Quarter. The civil, structural, mechanical and piping areas are on schedule for completion in the September Quarter. Electrical design commenced with key orders for MCC s and switchboards to be placed in the September Quarter. The EPCM contractor mobilised to site to begin supervision of the CIL tank plate work erection Infrastructure Access Roads The reinstatement of access roads to the project site was largely completed, enabling the mobilisation of construction materials and equipment. Camp The expansion of the accommodation village was well advanced by the end of the Quarter, with most of the proposed 300 rooms completed. This has enabled key sub-contractors to be mobilised to site, allowing commencement of the CIL tank erection. Construction Office The erection of the SCG construction office was completed. The EPCM office was largely completed with electrical installation to be completed early in the September Quarter. 5

6 Figure 1: July 2013, Commencement of construction at Tembang erection of leach tanks Magazine Pre-fabrication of the steel structure for the Magazine commenced during the Quarter in Jakarta and is being undertaken by Bluescope Steel Site Works De-watering of Belinau Pit De-watering pumps were in transit to site and site preparations were well underway. The fabrication of the lime dosing facility was underway in Jakarta and mechanical equipment was in transit to site. Civils The construction site was cleared back to its original levels and installation of the hard stand and drainage was underway. Structural The first package of steel was received on site and the CIL tank erection had commenced. 1.6 Community Relations The Company has ramped up Community Relations activities in line with the increase in site activities at Tembang. During the Quarter, the Company agreed the formation of an integrated local team, including the both Company and local government officials including the police and army participants. 6

7 The integrated team was established to better co-ordinate the employment of local community people, allow for the participation of local supply contracts and also deal with any security activities. During the quarter, 94 local people were employed Musi Rawas Utara Regency Split During the Quarter, the Indonesian Parliament approved the split of the Regency of Musi Rawas in South Sumatera into two Regencies. The Tembang Mine Project falls within the new Regency, namely that of Musi Rawas Utara. It is currently uncertain when the formal split of government agencies and responsibilities for the new regency will take place. As the permitting process for Tembang is almost complete, this regency split is expected to have minor implications for the Project in the short term. 2.0 Tembang Development Drilling and Exploration 2.1 Development Drilling Belinau A program of in-fill drilling was completed at Belinau comprising three holes (RDD ). The results from holes show the upper levels of the northern shoot weaken closer to surface but still remain significant. RDD intersected g/t Au and g/t Ag from to metres. RDD intersected g/t Au and 14.9 g/t Ag from to metres down hole in a hanging wall vein. One further hole RDD was drilled at depth to convert Inferred Resources into the Indicated category. The hole successfully intersected the target vein as well as a hanging wall split. The results show that both the main vein 7.99g/t Au; 60.7g/t Ag) and hanging wall split 5.31 g/t Au, 67.3 g/t Ag) are well mineralised. 7

8 Figure 3: Belinau Drilling Progress Figure 4: RDD intersection 8

9 Two exploration holes, RDD and RDD 13219, were completed in April 2013 to test a potential northerly vein intersection or flat-lying splay of the main lode. Hole RDD was drilled to a depth of 125 metres and intersected a zone of typical high grade banded epithermal quartz veining from 71.2 metres to metres down-hole. A wide interval of quartz-calcite stock works was also intersected from metres to 105 metres. The hole ended in mineralisation (quartz veined polymictic breccia). Significant assay results were returned from the following intervals: Ø g/t Au, 8.8 g/t Ag from 70.7 to 84 metres including g/t Au, 21.1 g/t Ag from 72.2 to 75.5m. Hole RDD was drilled approximately 50 metres to the northwest of RDD13218 to a depth of metres and intersected two narrow zones of quartz-calcite stockworks from to metres and from to metres. The best result was g/t Au, 1.7 g/t Ag from 122 to 123 metres down-hole. This indicates mineralisation is possibly decreasing to the north. With the recognition of potential splits or hanging wall zones peripheral to the main vein system, further in-fill sampling of previous geotechnical/metallurgical drill holes in 2011/2012 have been completed with the following intervals: Ø Hole RDD 11180, a metallurgical hole, intersected g/t Au and 71.5 g/t Ag from 39.2 to 41.2 metres and RDD a geotechnical hole intersected g/t Au and 9.3 g/t Ag from to metres down-hole. Figure 5: RDD13218 intersection looking North West (Bitu Vein) 9

10 While the geometry of this recent intersection in hole RDD 13218, as well as the recent re-sampling of previous holes, is not fully understood, the results highlight the continued high-grade exploration potential around the Belinau vein system. The Company plans a review of the structural controls of gold mineralisation followed by further diamond drilling in the 3 rd quarter of Buluh At Buluh, development drilling is ongoing and comprised two components: a geotechnical and hydrological drilling program and an in-fill program designed to confirm existing resources. The geotechnical program has been completed with seven holes completed. Golders are overseeing this program. Two of these holes intersected veining outside the previous model and have been assayed. Hole RDD intersected g/t Au, 62.4 g/t Ag from 95.5 metres to 97.5 metres down-hole. The in-fill/confirmation drilling has shown the vein zone to simpler than previously interpreted with the main Buluh vein striking NNW and dipping to the east. The zone is characterised by vughy, occasionally colloform banded, weakly sulphidic veining intercalated with sheared stock worked host rocks and is clearly fault controlled. The zone pinches and swells along its strike length as well as up and down dip and ranges from 1-9 metres down hole. The veining is particularly well developed in the southern Buluh area. Assays have been received for nine holes from the south of the deposit and are in line with visual expectations. The Rozali structure is narrow and generally less that 0.5 g/t Au. However, South Buluh has returned some very encouraging intercepts. RDD returned g/t Au and 76.6 g/t Ag from to metres downhole. RDD intersected g/t Au and g/t Ag from 40.7 to 44.2 metres downhole (including 9.35 g/t Au, g/t Ag). 10

11 Figure 6: Buluh Drilling Progress 11

12 Figure 7: RDD intersection 2.2 Geochemical Sampling Sub soil wacker sampling was continued over the CSAMT anomalies at South Aidit and Anita areas with encouraging results up to 0.49 g/t Au. NE Aidit and Anita area returned no significant results. At Kenapa, an interpretation of the ground magnetics shows elevated sub-surface bedrock geochemistry occurs on areas of moderate to high magnetic intensity. There is a distinct north-south 300m x 150m zone of low magnetic intensity to the west, which may indicate a structure. Further interpretation is required prior to drill target selection. 12

13 Figure 8: CSAMT Progress Table 3 Tembang Resource Drilling Significant Intersections Au >0.5g/t reported during 2 nd Quarter 2013 Hole No Location Type Easting Northing Depth Azimuth Dip From To Length Au g/t Ag g/t Comments RDD Asmar Vein Includes 3.3m at <0.5 g/t Au RDD Asmar Vein RDD Asmar Vein RDD Asmar Vein RDD Asmar Vein RDD Asmar Vein RDD Asmar Vein Includes 0.7 m at <0.5 g/t Au RDD Asmar Vein Colluvium RDD Asmar Vein RDD Asmar Vein Includes 2.3m at <0.5 g/t Au RDD Asmar Vein RDD Asmar Vein RDD Asmar Vein Includes 2.9m at <0.5 g/t Au RDD Asmar Vein RDD Belinau Vein Revised 2 RDD Belinau Vein Includes 8.19 g/t Au, 46.6 g/t Ag RDD Belinau Vein Infill sampling of geotechnical hole RDD Belinau Vein Footwall vein, Includes 6.77 g/t Au, 14.5 g/t Ag RDD Belinau Vein RDD Belinau Vein RDD Belinau Vein RDD Belinau Vein Includes g/t Au, 21.1 g/t Ag RDD Belinau Vein RDD Belinau Vein RDD Belinau Vein Hole ended in mineralisation RDD Belinau Vein Hanging wall vein, metallurgical hole RDD Belinau Vein RDD Belinau Vein Infill sampling of geotechnical hole RDD Belinau Vein Infill sampling of geotechnical hole RDD Belinau Vein Infill sampling of geotechnical hole RDD Belinau Vein minor quartz vein RDD Belinau Vein weak quartz stockwork RDD Buluh shear zone RDD Buluh Vein weak quartz stockwork RDD Buluh Vein weak quartz stockwork RDD Belinau Vein RDD Belinau Vein Includes 5.31 g/t Au, 67.3 g/t Ag RDD Buluh Vein RDD Buluh Vein minor quartz vein RDD Buluh Vein RDD Buluh Vein minor quartz vein RDD Buluh Vein RDD Buluh Vein Includes 9.35 g/t Au, g/t Ag Vein Includes 0.3 g/t Au 1 Addition to significant interval 2 Revised significant interval was previously reported as As of 03rd July

14 3.0 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. Tandai has a long history of formal mining from the early part of the 20th century until after World War II. The Company s tenements cover a district in which at least three Dutch companies worked portions of the system. The old Dutch mining town at Tandai still remains, and was re-furbished (when the mine was redeveloped and worked between 1985 and 1995). Under the arrangements agreed with Newcrest Mining Limited ( Newcrest ) in August 2010, Newcrest has the right to earn a 70% interest in the Tandai tenement by spending US$12 million on the project over 5 years. Reconnaissance exploration of Asa Prospect continues to show good progress with a NE-SW trending corridor of mineralisation defined over 800 metres. 3.1 Asa Prospect Figure 8 Tandai District and Prospects During the Quarter, exploration comprised soil sampling and creek mapping to outline the zone of significant gold and base metals mineralisation originally discovered in the Kokoi River. Exploration has been successful in defining a NE-SW corridor of silicification and quartz veining over 2km. 14

15 Locally, the structure appears quite complex with the best zones of mineralisation most likely occurring at intersections with NNW trending structures. Geological mapping has shown there is a clear association of mineralisation with the emplacement of andesitic-dacitic dykes, which is similar to Tandai. These dykes also appear to be more magnetic than the surrounding andesitic host rocks. A base line has been cut along the mineralised trend with two cross lines in anticipation of a ground magnetic survey using company equipment to better outline the structure and zones of potential mineralisation. Figure 9: Geological Map of Asa Prospect with gold assay highlights Geological Mapping and Sampling Reconnaissance mapping has been focused on prospecting extensions of previously sampled outcrops. Two new significant zones of mineralisation have been identified at Bujang Ridge and along the Nokan River. The latter zone can be traced for over 200 metres and forms a significant topographic feature. More recent sampling has extended the discovery outcrops at the bridge crossing as well as to the south west with up to 14.6 g/t Au returned from a quartz vein stockwork zone. 15

16 2.1.2 Soil Sampling Ridge and spur sampling has been completed throughout the NW-SE trending corridor. A total of 147 samples have been collected. Preliminary assays results for gold show weak to moderate anomalism at the northern end of the interpreted corridor of mineralisation. A lower geochemical threshold is applied based on composite sampling. Additional deep soil sampling to better define projected extensions has been completed as well as line of soils in the south west. Assays are awaited for these most recent samples Forward Plans Prospecting is planned in the west to outline the limits of significant out crops within the NW-SE trending corridor. Ground magnetics is also planned to help delineate the dykes and assist in understanding the structural controls to mineralisation. The data will then be compiled and interpreted to define potential scout drill targets. 4.0 Corporate 4.1 New Board and Management Appointments Subsequent to the end of the Quarter, Sumatra announced two key appointments, further strengthening its Board and senior management team ahead of its impending transition to gold developer and producer. Experienced Australian mining executive Mr Steve Robinson has been appointed as a Non-executive Director, while Mr David Fowler has been appointed as Chief Financial Officer. Both appointments are effective immediately. Mr Robinson, a Rhodes Scholar, is the founding Director of independent corporate advisory firm Lincoln Capital and has extensive international experience at senior executive levels within the mining industry. He was previously a Director of Barrick (Australia Pacific) Limited, Group Manager Planning with the leading Australian mineral sands producer Iluka Resources Ltd and a senior manager in the gold business unit at WMC Resources Ltd until the divestment of the gold business in 2001 for $570 million. Mr Robinson is currently a Non-executive Director of two other ASX-listed companies, Bulletin Resources Ltd and Orrex Resources Ltd. Mr Fowler is a highly experienced corporate finance executive with over 20 years of experience working in the mining industry in South America, Australia and Asia. He previously served as Chief Executive Officer of Orosur Mining Inc., having previously held the position of Finance Director for the same Company before being appointed CEO in He previously worked as CFO for Western Metals Ltd. 4.2 Tandai Newcrest Joint Venture The Company understands that Newcrest are currently reviewing their participation in the Tandai Joint Venture. Under the terms of the joint venture agreement, in the event that Newcrest withdraws from the Tandai Joint Venture, then Sumatra must acquire the 70% Newcrest interest in the Joint Venture Company for a nominal consideration 16

17 4.3 Cash Position and Capital Structure Following completion of the rights issue Sumatra s cash reserves at the end of the June Quarter were A$19 million, putting the Company in a strong position to proceed with development of the Tembang Project. The proceeds raised from the rights issue will be used primarily to develop the Company s flagship Tembang Gold-Silver Project in Sumatra, Indonesia, as well as to progress exploration and business development opportunities. The Company is pleased to provide an updated list of its Top 20 shareholders following completion of the rights issue: Top 20 Shareholders SUMATRA COPPER & GOLD PLC Rank Name Units % of Units 1. PROVIDENT MINERALS PTE LTD 107,632, % 2. PT SARATOGA INVESTAMA SEDAYA 64,234, % 3. MR GARIBALDI THOHIR 44,356, % 4 YAW CHEE SIEW 24,972, % 5 HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED 23,639, % 6. NATIONAL NOMINEES LIMITED 23,633, % 7. CITICORP NOMINEES PTY LIMITED 12,529, % 8. ABN AMRO CLEARING SYDNEY NOMINEES PTY LTD 8,493, % 9. UOB KAY HIAN PRIVATE LIMITED 7,772, % 10. BERRAFALL PTY LTD 7,500, % 11. ADI ADRIANSYAH SJOEKRI 4,974, % 12. DBS VICKERS SECURITIES (SINGAPORE) PTE LTD 4,672, % 13. JP MORGAN NOMINEES AUSTRALIA LIMITED 4,626, % 14. MERRILL LYNCH (AUSTRALIA) NOMINEES PTY LIMITED 1,700, % 15. MR MATTHEW CHARLES FARMER 1,685, % 16. BNP PARIBAS NOMS PTY LTD <DRP> 1,538, % 17. MR BRADLEY JOHN PETTERSSON 1,500, % 18. LOFIVA PTY LTD 1,368, % 19. PATA NOMINEES PTY LTD 1,350, % 20. ROSIGNOL PTY LTD 1,235, % Top 20 holders of CHESS DEPOSITORY INTERESTS 1:1 349,414, % Total Remaining Holders Balance 63,126, % Total Issued CDIs 412,540,645 17

18 For further information please contact: Julian Ford Nicholas Read / Paul Armstrong Managing Director Read Corporate Sumatra Copper & Gold plc T: M: Nicholas@readcorporate.com.au About Sumatra Copper & Gold Sumatra Copper & Gold plc (ASX: SUM) is an emerging gold and silver producer and the pre-eminent precious metals explorer in southern Sumatra, Indonesia. The Company has a significant project portfolio covering an area of more than 3,200km 2 and encompassing a pipeline of projects ranging from greenfields exploration projects to brownfields, nearproduction opportunities. Sumatra s flagship asset, the 100%-owned Tembang Gold-Silver Project, is on track for production during Tembang has Proven Reserves of 2.4Mt at 2.5 g/t Au and 38.7 g/t Ag for a total of 0.2Moz of gold and 3Moz of silver and Probable Reserves of 3.1Mt at 2.1 g/t Au and 25.6 g/t Ag for a total of 0.2Moz of gold and 2.5Moz of silver (total of 0.4Moz of gold and 5.5Moz of silver) which are compliant with the 2004 JORC Code. The Stage 1 production plan is a low-cost, high-grade operation targeting 400,000 tonnes per annum (tpa) process capacity to produce 30,000oz per annum of gold and 200,000oz per annum of silver. Sumatra plans to fund the Stage 2 upgrade from cash flow, increasing throughput to 900,000tpa and production to 50,000oz of gold per annum and silver production to 500,000oz per annum. The ramp-up is expected to take place over a one year period. The current life-ofmine plan is for 7.5 years based on the current resource inventory. Under a joint venture with Newcrest Mining Ltd, Sumatra is currently exploring the Tandai project (30% Sumatra; 70% Newcrest). Newcrest has already met its minimum expenditure position of US$1.75 million and has an option to earn a 70% interest by spending US$12 million over 5 years. Sumatra has identified significant gold mineralisation at Tandai, which has historic high-grade production of 1.4Moz ounces gold. Sumatra also has the 100%-owned Sontang Project, which is an early-stage high-grade zinc, gold and silver exploration project. Competent Person s Statement Mineral Resources The information relating to Mineral Resources is based on information compiled by Mr David Stock MAusIMM who is an independent Geological Consultant to the Company and is a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves' and has consented to the inclusion in this report of the matters based on his information in the form and context in which they appear. In addition, the Mineral Resource estimates were reviewed by Mr Robert Spiers who is a member of AIG and a full time employee of Hellman & Schofield Pty Ltd. Mr Spiers has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Competent Person s Statement Ore Reserves The information in this report that relates to Open Pit and Underground Ore Reserves is based on information compiled by Mr Shane McLeay of Entech Pty Ltd, who is a Fellow of the Australasian Institute of Mining and Metallurgy. Mr McLeay has sufficient experience, which is relevant to the style of mineralisation and type of deposit under consideration and to the activity, which he is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves'. Mr McLeay consents to the inclusion in this report of the matters based on his information in the form and context in which it appears. 18