Sumatra Copper & Gold will implement a revised mine plan at its Tembang Gold-Silver Project in Sumatra mine which is likely to delay the timeline to production. The revised plan will underpin a number of initiatives being implemented to optimize Tembang and are likely to result in a significantly more robust project.
Earlier this year, Sumatra initiated a series of optimization studies to de-risk the Tembang project both in terms of the volatile gold price and project economics. The company decided to revise the mine strategy based on mining the Buloh and Asmar deposits during the stage 1 development. It has also decided to progress the Belinau deposit as an underground mine from the outset, rather than starting with an initial pit cutback.
The revised mine plan is expected to substantially improve cash flow over the first two years of the project life, and lower cash costs, which should translate into improved project economics.
Sumatra says the optimized mine plan and an updated mineral resource will be completed in the fourth quarter, allowing finalization and draw-down of the project funding package. It says the timeline to production is likely to be delayed by the later-than-expected draw-down of the debt funding.
The final funding plan will only be confirmed once the updated mine plan has been finalized and reviewed. As a precautionary measure, Sumatra has slowed project expenditure commitments until a final funding arrangement is in place.
The company has made significant progress with initial construction works on site, and detailed engineering is nearing completion. Long-lead items have been ordered and road access to the site has been completed, while the 300-person accommodation camp also nears completion.
Tembang has proven reserves of 2.4 million tonnes @ at 2.5 grams/tonne gold and 38.7 grams/tonne silver for a total of 200,000 ounces of gold and 3 million ounces of silver and probable reserves of 3.1 million tonnes @ 2.1 grams/tonne gold and 25.6 grams/tonne silver for a total of 200,000 ounces of gold and 2.5 million ounces of silver, all of which are JORC compliant. It has a reserve estimate of 5.5 million tonnes @ 2.3 grams/tonne gold and 31.4 grams/tonne silver for 513,000 gold equivalent ounces. The stage 1 operation would produce 400,000 tonnes of ore annually and would have a mine life of around five years.