Name and Location
Tembang gold/silver project, Sumatra, Indonesia.

Client
Sumatra Copper & Gold.

Project Description
The updated feasibility study on the Tembang project completed in 2014 envisages total production of 2.1-million tonnes of ore at 2.8 g/t gold and 33 g/t silver for 168 795 oz of recovered gold and 1.8-million ounces of recovered silver at a mill process rate of 400 000 t/y.

The development strategy of Tembang is to focus on the underground mining of high-grade veins from Belinau as the core production source of the project.

The Belinau underground, narrow-vein mine is expected to ramp up to a maximum capacity of 200 000 t/y in Year 3.

During the five-year production period, more openpit ore will fill the mill capacity than the ore supplied by Belinau. The mining method applied to this deposit is jumbo ore drive development and bottom-up longhole stoping using unconsolidated waste-rock backfill.

About 40% of the ore production will be from development and 60% from longhole stoping. Average yearly production of 33 000 oz of gold and 345 000 oz of silver is expected.

The cash flow from operations will be used to drill potential additional underground targets to replace and supplement the Belinau underground mine.

To achieve this, Sumatra will need to develop additional underground mines. The existing high-grade openpits at Siamang, Bujang and Berenai remain open at the bottom of the existing pits. The company intends to drill these projects out once cash flow is available from the Tembang operation.

Net Present Value/Internal Rate of Return
The project has a pretax net present value, at a 9% discount rate, of $33.8-million at full capital cost.

Value
The project has a total estimated capital cost of $71.3-million, of which $19.5-million has been spent to date, with $33.6-million to be spent until project completion and $18.3-million sustaining capital over the five-year mine life.

Duration
Production is expected in the fourth quarter of 2015.

Latest Developments
The Tembang gold mine delivered 2 743 oz of gold and 63 992 oz of silver during the three months ended December 31, after delivering its first gold in September last year.

The Balinau underground mine continued to ramp up to full production during the quarter, with  8 439 t of ore mined during the quarter at an average grade of 5.53 g/t gold and 132 g/t silver.

Openpit mining also continued to ramp up during the quarter, with 92 278 t of ore delivered at an average grade of 0.86 g/t gold and 21.7 g/t silver.

During the quarter under review, Sumatra sold 804 oz of gold and 32 151 oz of silver, generating revenue of $1.3-million.

Key Contracts and Suppliers
Not stated.

On Budget and on Time?
Yes.

Contact Details for Project Information
Sumatra Copper & Gold, tel +61 8 6298 6200.