AN exploration alliance between Sumatra Copper & Gold and Merdeka Copper Gold aims to extend mine life and increase production at the Tembang Gold-Silver Project. The alliance will see Indonesian gold producer Merdeka fund ongoing exploration at Sumatra’s asset.


Sumatra Copper & Gold’s Tembang Gold-Silver Project in South Sumatra.

Merdeka will initially invest US$1.5 million over the next six months and Sumatra will issue CDIs to Merdeka in tranches based on its exploration spend during each three month period. Ultimately Merdeka intends to invest in stages for up to US$10 million under similar terms for each successive approved exploration program, subject to ongoing exploration success and appropriate corporate approvals.

Merdeka is a Jakarta Stock Exchange listed mining company that operates the Tujuh Bukit Gold-Copper Project in East Java and has an experienced executive team headed by Colin Moorhead, who is a former director of exploration for Newcrest in Indonesia. In this role he was responsible for the multi-million ounce Gosowong mine and Newcrest’s past joint venture with the company at Tandai.

Merdeka is expanding its mining footprint in Indonesia and Sumatra believes it offers a strong balance sheet and technical expertise.

At Tembang two exploration drill drives will be established at the Belinau underground mine between Levels 11 and12, which is the current base of planned development, to drill for depth extensions to the ore body. Two specialised diamond drill rigs have been ordered for this program, which is anticipated to commence during the December quarter.

Sumatra has started shrink stoping at Belinau from Level 9 upwards. This is a highly selective mining method that minimises dilution and provides high value ore to the mill.

A broken rock inventory will be built and drawn once the stope reaches the next level. The company plans to have four stopes operating by the end of the year and eight stopes operating simultaneously by the end of the March 2018 quarter.

Sumatra has also signed an agreement with its major shareholders Provident Minerals and PT Saratoga Investama Sedaya to accelerate U$S2 million of the US$7.5 million major equity raise planned for November 2017 under the amended facility. The funds will be provided by way of a subordinated loan that will be converted into equity in November.

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