Tembang gold project expansion significantly improves economics
Monday, September 24 2012 - 01:50 AM WIB
Australia-listed firm Sumatra Copper & Gold plc reported on Monday it has completed the Pre-Feasibility Study (PFS) for Stage 2 of its 100%-owned Tembang Gold Project in South Sumatra, which significantly improved the total project economics and increases the scale of the operation. Stage 2 will primarily be funded from cash flow from Stage 1 profits.
The PFS is based on US$1,500/oz gold and $3O/oz silver price. The PFS Stage 2 has considered a plant design based on a nominal 400,000 tpa for the first three years (Stage 1) and upgrading to 900,000 tpa for years three to eight (Stage 2); utilising a single stage crushing circuit and a conventional SAG, Ball mill combination followed by gravity and carbon in leach circuits.
A two stage development approach was adopted at Tembang to fast track the production schedule and take advantage of the gold price and market conditions, the company said.
Stage 1: A relatively small-scale, low-capital cost, low-risk, high-grade operation involving mining at two deposits, Belinau (underground and open pit) and Asmar (open pit). Commercial production is expected to commence in the December quarter of 2013.
Stage 2: A larger-scale, multiple open pit operation involving mining at six of the seven known Tembang deposits; Belinau, Asmar, Berenai, Buluh, Bujang and Aidit. Cash flow from Stage 1 will be used to fund Stage 2 development which will mine and treat the remaining open-pit Reserve with minimal incremental capital costs. Commercial production has been brought forward by three years, and is expected to commence in 2015. The company has been able to fast track the PFS by leveraging the technical and commercial analysis undertaken by the project team during the Stage 1 DFS, it said.
Sumatra Managing Director Julian Ford said the successful PFS underlined the robustness of the Tembang Project with cash costs after silver, credits decreasing to less than $450 per ounce and a net cash flow of $222 million (using gold price of $1,500 per ounce; at current gold prices this net revenue increases to US$400 million).
?The Stage 2 PFS builds on the successful PFS for Stage 1, with a predevelopment incremental capital of US$1.5 million resulting in an increased net cash flow to US$222 million,? Ford said.
?Under our 2-staged approach we were able to significantly reduce the predevelopment capital for the project as a whole and de-risk Tembang by completing open pit mines in stages and incorporating the process plant expansion into Stage 2.
?We are now fully focused on finalizing the project?s permitting and financing based on the PFS Stage 1 results released two weeks ago. The Stage 2 PFS results based primarily on the Tembang Reserve will however significantly improve the flexibility of funding options for Stage 1. As the Stage 2 mine plan is based on a LOM reserves, we will also review the options for increasing confidence of the Stage 2 PFS to a definitive status.?
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Editing by Dadan Wijaksana