ASX Announcement 30 July 2012

Transcription

1 ASX Announcement 30 July 2012 QUARTERLY ACTIVITIES REPORT For three months ended 30 June 2012 Highlights Tembang Project Development Stage 1 Definitive Feasibility Study scheduled for release in August Stage 2 Pre-feasibility Study on-track for completion in September quarter. Re-optimised development plans indicate significantly reduced pre-development capital requirements. 3 of 5 milestones for critical Forestry Permitting now complete. Application is progressing through the Forestry Department. Negotiations for lower cost gas supply in South Sumatra progressing well. Tandai Exploration Tandai drilling returned an encouraging 2.0 g/t Au and 38.6 g/t Ag from 54.0 metres from TDD Recent rock chip sampling at the Ulukau Prospect returned assays of up to 55 g/t Au. Stream sediment sampling at Seblat returned assays up to g/t Au. Regional Exploration Diamond drilling for feasibility studies continued at Asmar. Best result was RDD returning g/t Au and 8.8 g/t Ag from 5 metres (inc g/t Au, 27.1 g/t Ag). Grid based sub surface geochemical sampling was completed over southern Belinau and is in progress at Bono s Hill. Results to date show minor gold anomalies within significant zones of anomalous arsenic. A CSAMT survey over Tembang on-track for completion in July. Directors Warwick Morris Non-Executive Chairman Julian Ford Managing Director and CEO Adi Sjoekri Executive Director Jocelyn Waller Director (Non-Executive) Peter Nightingale Director (Non-Executive) Contact Level 2, 66 Hunter Street Sydney, NSW 2000 T: E: info@sumatracoppergold.com Registered in England and Wales Registered address 39 Parkside, Cambridge United Kingdom CB1 1PN Registered Number Corporate Completion of $5 million convertible debt finance facility with Macquarie Bank Limited. Outlook for the next quarter Sumatra will target the following key milestones: Completion of Tembang Stage 1 DFS. Completion of Tembang Stage 2 PFS. Indicative terms or Heads of Agreement for debt funding of Tembang Stage 1. Significant progress in the full permitting of Tembang. Exploration progress from the highly prospective Tandai project.

2 1.1 Tembang Project Overview During the June 2012 quarter Sumatra Copper & Gold plc (ʻSumatraʼ or ʻthe Companyʼ) continued to fast track its wholly-owned Tembang gold and silver project, located in southern Sumatra. Sumatra plans to mine Tembang over two-stages. Stage 1 is a low-risk, small scale operation which will commence production at Belinau and Asmar deposits. Belinau is a high-grade vein system with strong exploration upside and Asmar has a perfect oxide blend for Belinau with low strip ratio. Stage 2 comprises the remaining four Tembang deposits, Berenai, Buluh, Aidit and Bujang and will comprise a larger mine and throughput. It is currently undergoing a Pre-Feasibility Study ( PFS ). 1.2 Tembang Stage 1 Definitive Feasibility Study (DFS) The Company is pleased to report the following major milestones for the Tembang Stage 1 DFS study have been achieved: Critical geotechnical and hydrological testing at Asmar complete. Belinau underground geotechnical studies complete. Belinau hydrological testing complete. Detailed metallurgical studies complete. Communition modeling complete. The Company expects geotechnical drilling at the Belinau open pit to be completed next week. The existing pit geometry although conservative, has been adopted in the study. Detailed metallurgical studies have been finalised with metallurgical drilling at Asmar completed. It was particularly pleasing to see metallurgical drillhole RDD at Asmar returning g/t Au and 8.8 g/t Ag from 5.0 metres. Communition modelling has also been completed with an optimised Stage 1 DFS test work program finalised. Based on the Stage 1 work completed to date, the Stage 2 PFS flow sheet indicates a low capital cost upgrade to the communition circuit to achieve a targeted throughput of 900,000 tpa. Testing of the civil engineering foundations for the original plant has proven positive, with all but the mill foundations proving to be of sufficient quality for reuse. This has favourable implications for capital cost savings but major positive implications for the development schedule. Similarly, the Company has confirmed the use of the existing Tails Storage Facility ( TSF ) for up to 8 months, further reducing pre-production capital. The DFS will now undergo external auditing and Board review over the next few weeks with a targeted release of the final DFS results expected at the end of August The Company has received expressions of interest from at least 12 financial institutions for debt and equity funding of the Tembang project. Indications are that the re-optimised Tembang development plan has significantly reduced the pre-development capital. The Company expects the modest funding required for Stage 1 will be well within Sumatra s capability to secure - subject to project permitting being granted. 2

3 1.3 Tembang Permitting The Company is pleased that significant progress has been made in this key area with the first 3 of the 5 milestones for Forestry Permitting ( Pinjam Pakai ) now complete. During the quarter, the Company completed the Forestry Approval pre-conditions at the Regency Level, approval by South Sumatra s Provincial Governor and Director General of the Department of Mines in Jakarta. These are significant advances and further validate the Company s strategy to manage these processes through the Company s experienced local senior management team. The final Tembang project footprint requiring Forestry approval is estimated at 600 hectares. Compensation for 90% of the project footprint is complete; with the remaining 10% area still in progress. A team from the Forestry Department, Local Regency and the Company focused on completing the land compensation process has been established. The Company expects to receive an in-principle forestry permit early in the fourth quarter followed by full Forestry Permitting towards the end of the year. 1.4 Alternative Energy Supply Sumatra has made significant progress in identifying materially cheaper energy supplies for the Tembang project. As a result of these negotiations and the relatively low cost upgrade to the planned process plant for Stage 2, the Company has elected to fast track the Stage 2 PFS. The Tembang project is currently based on diesel only energy with a cost assumption in excess of US$1 per litre. The fast track development of Stage 2 and the doubling of throughput will allow Stage 1 to benefit from improved energy costs within 2 years of start-up. Energy costs are expected to be around 30% to 50% lower than the current diesel energy costs. Ore supply for Stage 2 will be derived from Berenai, Buluh, Aidit and Bujang deposits. The cost of the process plant expansion to 0.9 Mtpa will be potentially funded from cash flow based on a projected production of 80,000 ounces gold equivalent per annum. 3

4 2.1 Tandai Project Overview The Tandai project is located within the northern part of the Bengkulu Utara IUP, in the Kabupaten area of Bengkulu Utara, approximately 100 kilometres north of Bengkulu. Tandai has a long history of formal mining from the early part of the 20th century until post World War II. The Company s tenements control 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 by PT Lusang Mining Ltd (in a joint venture with CSR, then Billiton) when the mine was redeveloped and worked between 1985 and Under the arrangements agreed with Newcrest Mining Limited ( Newcrest ) in August 2010, Newcrest have the right to earn a 70% interest in the Tandai tenement by spending US$12 million on the project over 5 years. Exploration activities have focused on the Ulukau prospect which was advanced to drill status by early June. Drilling commenced with UDD which intersected several poly episodic quartzchalcedony quartz vein breccia zones. A second hole UDD is currently in progress to test this prospect. A total of 300 metres were drilled this quarter in both holes. Follow up mapping and sampling surrounding the area is now underway to delineate possible extensions to structures and mineralisation earlier identified. In the regional exploration program, follow up of the most promising geochemical anomalies from the phase one program is now in full swing. In Lalangi, approximately 6 kilometres WNW of Tandai, where artisanal mining has been observed, recent rock sample assays have returned up to 131 g/t Au and 353 g/t Ag. 4

5 2.2 Tandai Exploration Figure 2. Tandai District and Prospects Diamond drilling focused on Glumbuk West, Siman and Toko Rotan testing CSAMT targets. Four holes, TDD to TDD were completed for a total of 1,515 metres during the quarter. Figure 3. Tandai current and planned drilling 5

6 Testing of the CSAMT anomalies was completed within the Tandai District and has covered most of the strike of the Tandai Lode and environs. Remaining activities include the completion of detailed logging and sampling of TDD Spectral analysis of selected alteration samples from the Tandai drill holes will also be carried out to better define the hydrothermal system within the district. Results In TDD the best interval was from 54.0 to 56.0 metres which returned g/t Au and 38.6 g/t Ag. A further 0.3 metre section from 28.4 to 28.7 metres yielded 2.45 g/t Au and 28.2 g/t Ag. Preliminary results on infill sampling from TDD identified an additional 0.5 metres at 1.66 g/t Au from to metres. A 0.3 metre section from to metres also yielded 0.68 g/t Au. The various low grade values (0.1 to 0.5 g/t Au) seen in TDD and spread over more than 200 metres of core of varying lithology, andesite, acid volcanic conglomerate, rhyolite and polymict andesitic volcanic conglomerate, reinforces the possibility of a vein system at depth. Figure 4. TDD looking west 6

7 Only one sample from TDD returned a significant result. This sample was taken from a 30cm sample of a 10cm white bull quartz vein typical of the Glumbuk style from to metres and yielded 2.15 g/t Au and 0.6 g/t Ag. There was no evidence of any sulphides and the margins of the vein were selvaged by carbonate, hematite and clay. Table 1. June 2012 quarter significant intersections Intercepts reported are intervals of Au >1.00 g/t Au with intervals of <1.00 g/t Au up to 3 metres included. All widths are apparent. Au grade is reported to two decimal places and Ag grade to one decimal place Samples are generally from diamond core drilling which is HQ diameter. Some intercepts may be of larger or smaller than HQ due to drilling logistics. Core is photographed and logged by the geology team before being cut in half. Half core samples are prepared for assay and the other half is retained in the core farm for future reference. Each assay batch is submitted with duplicates and standards to monitor laboratory quality. 2.2 Ulukau Prospect The Ulukau Prospect is located approximately 10 kilometres SSE of Tandai. This prospect was first identified during the regional sampling program when three outcrop samples returned assays of 1.53 g/t Au, 2.81 g/t Au and 3.72 g/t Au. The results from more recent selective sampling of quartz veins and pervasive silica-clay-altered wall-rock indicate up to 55 g/t Au in outcrop and 44 g/t Au in subcrop. Continued mapping and sampling in Ulukau has resulted in delineation of six major zones of persistent silica-clay alteration and quartz veins. A total of 2,000 metres (9 holes) have been scheduled for drilling. The holes are 200 metres apart along strike based on targeting criteria. Drilling commenced with UDD collared on 12 June This hole intersected several poly episodic quartz-chalcedony quartz vein breccias (monomictic) with fine grained andesite clasts rimmed with chlorite +/- pyrite. The hole was completed to a depth of metres on 26 June 2012 and the rig was moved to UDD

8 Figure 5. Ulukau Drilling Plan Figure 6. UDD m. Poly-episodic quartz-chalcedony vein breccia. 8

9 2.3 Tandai Regional Exploration Program A total of 109 stream sediment ( SS ) and Bulk Leach Extractable Gold ( BLEG ) and 24 rock samples were collected during the quarter. Most of the sampling has been carried out in the southern block of highly anomalous stream sediment geochemistry. Figure 7. Regional stream sediment and BLEG progress 9

10 Results An anomalous float sample of g/t Au was taken in Seblat at the Northern portion of the IUP area. This is now being followed up by the regional team. At the Lalangi prospect reconnaissance mapping has confirmed the presence of epithermal textures in some of the observed outcrops in the area. The latest preliminary results from samples taken during this quarter show very encouraging numbers. A 0.3 metre channel sample from one of the adits east of Air Lalangi River currently being mined returned high grade results to 34.6 g/t Au. A grab sample from west of Air Lalangi River yielded 131g/t Au. Two stream sediment samples from Air Siman south of Tandai also registered anomalous values of 39 and 80 ppb Au. Figure 8. Stream sediment results 10

11 Figure 9. BLEG results Ongoing Exploration Particular emphasis will be placed on the Ulukau prospect and environs at the same time as maintaining follow up of the best exploration targets from the IUP wide regional exploration program. 11

12 3.1 Tembang Exploration Grid based sub surface geochemical sampling has now been completed over southern Belinau and an infill program is in progress at Bono s Hill. Results to date show minor gold anomalies within significant zones of arsenic anomalies. Drilling Metallurgy - Asmar Asmar No Easting Northing RL Dip Azimuth Depth Hole ID Hole No. (me) (mn) (m) (Deg) (Deg) (m) 1 MET-01 RDD Figure 10. Tembang exploration targets 12

13 CSAMT Survey The CSAMT survey over the Tembang District remains on track for completion in July. Other Exploration All exploration teams, outside of Tembang, have been transferred to the Tandai exploration program to conserve funds and to assist in the development of new prospects. 4.1 Corporate Developments During the June quarter, the Company completed the conditions subsequent to the Convertible Loan Facility with Macquarie Bank. The Company has also progressed discussions with numerous third parties for the farmout of the Sontang project and other non-core assets. However the requirement for Indonesian base metals producers to process local concentrates to final finished products has had a material impact on the attractiveness of the Sontang project. As a result of these changed local factors, the Company will now pursue a different joint venture structure for the Sontang project. This strategy will recognise the strategic value of the Sontang prospect within the broader global base metals and precious metals environment. For further information please contact: Julian Ford Richard Edwards Melanie Gray Stokes Managing Director Company Secretary Investor Relations Sumatra Copper & Gold plc Sumatra Copper & Gold plc Walbrook IR About Sumatra Copper & Gold Sumatra Copper & Gold plc (ASX: SUM) is an emerging gold and silver producer and the preeminent precious metals explorer in southern Sumatra. It has a significant greenfields to brownfields project portfolio covering more than 3,200 km². Sumatra s 100%-owned Tembang project is on track for production during It has Proven and Probable Reserves of 5.5 million tonnes at 2.3 g/t Au and 31.4 g/t Ag for a total of 0.4 million ounces of gold and 5.5 million ounces 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 process capacity to produce 40,000 to 45,000 per annum gold equivalent. Stage 1 will comprise only 18% of the project s total gold Resource base. 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 found significant gold mineralisation at Tandai, which has historic high grade production of 1.4 million ounces gold. 13

14 Sumatra continues work at its wholly-owned Sontang project, which is a high grade greenfields exploration project. Competent Person s Statement Exploration Results The information in this report that relates to Exploration Results is based on information compiled by Mr Matthew Farmer, geologist, who is a Member of the Australasian Institute of Mining and Metallurgy. Mr Farmer is an employee of the Company who 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'. Matthew Farmer has consented to the inclusion in this report of the matters based on his information in the form and context in which they appear. Competent Person s Statement Mineral Resources The information in this report that relates 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 Member 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. Gold Equivalent reporting Gold Equivalent = gold assay + (silver assay / 50) where the number 50 represents the ratio where 50g/t Ag = 1 g/t Au. This ratio was calculated from the average of the 12 months of Financial Year 2011 from July 2010 to June 2011 taken from published World Bank Commodity Price Data and rounded up from 47 to ~menuPK: ~pagePK: ~piPK: ~theSitePK:476883,00.html The metal prices thus used in the calculation are the average gold price of US$1,500 per ounce and average silver price of US$30 per ounce. Metal recoveries assumptions are 90% for gold and 80% recovery for silver for Belinau. 14