The Initial Public Offering of the Company closed fully subscribed, raising A$12.0 million for the issue of 60 million chess depositary interests.

Transcription

1 Overview The year ended 31 December 2009 has been a significant year in the development of Sumatra Copper & Gold plc and its controlled entities ( Sumatra or the Company ). Major achievements since the end of the last financial year include: Corporate highlights: The Initial Public Offering of the Company closed fully subscribed, raising A$12.0 million for the issue of 60 million chess depositary interests. The commencement of trading of the Company s shares on the Australian Stock Exchange on 26 October 2009 (ASX:SUM). Attracting a number of internationally significant industry participants to become Sumatra shareholders. Approval received from the Foreign Investment Co ordinating Board of Indonesia for the formation of four PMA companies, to be held 92.5 % by the Company. Issue of 7 Exploration IUPs to the Company and related parties during and since the end of the year. Operational highlights: The Company s net attributable JORC compliant resources total 1.52 million ounces of gold and 18.3 million ounces of silver. Continued exploration of the Company s projects including the commencement of drilling at the Tembang project. Rock chip samples at the Sontang project yield results of up to 1.17 g/t gold, 1,230 g/t silver, 10.3% lead and 0.08% zinc. Quartz float samples collected from the Sungai Landai drainage to the north of the Glumbuk structure in the Tandai project returned results of 21.0 g/t Au and 91.8 g/t Ag. 4 SUMATRA COPPER & GOLD plc ANNUAL REPORT 2009

2 The Company s net attributable JORC compliant resources total 1.52 million ounces of gold and 18.3 million ounces of silver. SUMATRA COPPER & GOLD plc ANNUAL REPORT

3 CORPORATE ACTIVITIES The Initial Public Offering of the Company closed fully subscribed, raising A$12.0 million for the issue of 60 million chess depositary interests In October 2009, the Company s Initial Public Offering ( IPO ) closed fully subscribed with the issue of 60 million chess depositary interests at A$0.20, each representing one fully paid ordinary share, to raise A$12.0 million. The Company was admitted to the Official List of the Australian Securities Exchange on 23 October 2009 and the Company s securities commenced trading on 26 October Approval received from the Foreign Investment Co ordinating Board of Indonesia ( BKPM ) for the formation of four PMA companies, to be held 92.5% by the Company On 6 August 2009, the Company received approval in writing from the BKPM for the formation of four PMA companies, PT Lebong Gold, PT Bengkulu, PT Jambi Gold and PTR Musi Rawas Gold, to be held 92.5 % by the Company. These companies were formed in the year and hold IUPs (licences) under the new Indonesian Mining Law promulgated in January Sale of Oropa Limited Shareholding During the year, the Company sold 8.3 million shares in Oropa Limited (subsequently renamed Sihayo Gold Limited), which had been held as a non strategic investment, realising approximately A$660,000 which will be able to be spent on the Company s exploration programs. Indonesian Tenements Issue of 7 Exploration IUPs In accordance with the grandfathering provisions of the new Indonesian Mining Law promulgated on 12 January 2009, a total of 7 Exploration IUPs (Izin Usaha Pertambangan) have been granted to the Company (and related parties) covering an area of 3,171 km² of authorisations granted under the former Mining Law. The Exploration IUPs give the Company the right to complete its exploration programs and, subject to positive feasibility studies, are convertible into Production IUPs for an initial period of 20 years and extendable for a further 20 years (by way of two 10 year extension periods). The grant of the IUPs provides the Company with long term security of tenure. Appointment of CFO and Joint Company Secretary In November 2009, the Company appointed Mr Richard Edwards to the position of Chief Financial Officer ( CFO ) and Joint Company Secretary. Mr Edwards graduated with a Bachelor of Commerce degree from the University of New South Wales and is a member of CPA Australia and the Securities Institute of Australia. Mrs Alison Barr, based in the United Kingdom, remains as Joint Company Secretary. 6 SUMATRA COPPER & GOLD plc ANNUAL REPORT 2009

4 OPERATIONAL ACTIVITIES Background The Company is a minerals exploration company with an economic interest of up to 92.5% in 7 IUPs which cover 3,171 km² in central Sumatra, Indonesia and also in one further area under application for an IUP but subject to an overlapping claim dispute. The Company has three principal projects, including two gold silver projects (Tembang and Tandai) that were previously in production and a third project, Sontang, which is a recent polymetallic (gold, silver, lead, zinc and copper) in-house discovery with no prior production history. The Company s projects are located in the central part of Sumatra, a part of the island with a substantial known mineral endowment and from which more than 3 million ounces of gold and 25 million ounces of silver are reported to have been produced. Currently JORC compliant mineral resources of 1.64 million ounces of gold and 19.8 million ounces of silver are contained within the Company s project areas. Indonesia Indonesia is an archipelago of more than 17,000 islands straddling the equator in south east Asia, with Sumatra located at the north western end. The country has 33 provinces sub divided into regencies and cities, collectively the key administrative units responsible for providing government services. Indonesia is a developing nation with an estimated population of 238 million people, who are predominantly Muslim with an estimated GDP per capita of US$3,400. The country is a republic with a democratically elected President who is both chief of state and head of government. In 2008, Indonesia was the world s seventh largest gold producer, with production of some 116 tonnes. Minerals and related products are some of Indonesia s most important sources of foreign currency, contributing some 19% of the country s exports. Location map showing the Company s projects and Indonesian copper and gold mines SUMATRA COPPER & GOLD plc ANNUAL REPORT

5 The country is home to one of the world s largest gold mines, Freeport McMoRan Copper & Gold Inc. s Grasberg operation in Papua where gold production is a by product of copper mining. Other mining operations include Newmont Mining Corp s Batu Hijau copper gold mine in West Sumbawa, and Newcrest Mining Limited s Gosowong gold mine on Halmahera Island. In 2006, when the Company was formed the level of foreign activity in the exploration sector in Indonesia was relatively low; this, together with the implementation of regional autonomy, provided a good opportunity for the Company in co operation with its Indonesian Partner, to obtain mineral rights over extensive prospective areas. To date, the activities of the Company and its Indonesian Partner have been focused on the island of Sumatra. Sumatra is one of the largest islands in the Indonesian archipelago, and has a long history of gold mining dating back to the time of Indian trading activity approximately 1,000 years ago. While under Dutch administration the country s largest gold mines were underground operations on the high grade Donok and Tandai epithermal vein deposits in Sumatra. The majority of the precious metal production from the area was by Dutch companies, dating from the early 1900s until the Japanese occupation of Sumatra in 1942, with approximately 3.0 million ounces of gold and 25.0 million ounces of silver reported to have been produced. Mining and exploration was interrupted by World War II and then subsequently by the Bre X scandal and the Asian financial crisis in the late 1990s. Location of the Tembang, Tandai, Lebong and Sontang projects 8 SUMATRA COPPER & GOLD plc ANNUAL REPORT 2009

6 Tembang Project The Tembang project is located approximately 120 kilometres north northeast of Bengkulu in South Sumatra province. Tembang is a former mine with exploration activity dating back to the 1980s when CRA controlled the property. It was in production from late 1997 to March 2000, ceasing operations due to the weakening gold price which had declined to around US$250 per ounce at the time of closure. The Company has rights to a 92.5% economic interest in two IUPs (21/KPTS/DISTAMBEN/2009 and 22/KPTS/DISTAMBEN/2009) totalling an area of some 850 km² over and around the old mine site which are host to known and partially explored epithermal gold silver and copper gold porphyry systems, possibly reflecting extensions of the historically important goldfields of Bengkulu to the south west. The Company has acquired existing comprehensive data sets which include airborne geophysics, 128,000 metres of RC and diamond drilling, soil geochemistry, topography and previous production records. Tembang is a large intermediate sulphidation epithermal deposit comprising gold silver bearing quartz sulphide veins hosted by Tertiary volcanics. Two vein styles are present; a relatively wide and continuous main vein set surrounded by irregular narrower veins that occur in both the footwall and hanging wall providing a halo of mineralisation peripheral to the main veins. The prior operator mined only the main veins, to a cut off grade of 1.0 g/t Au and discarded the lower grade halo mineralisation. In May 2009, a pre feasibility study and scoping studies on higher throughputs were completed by Snowden Mining Industry Consultants. The studies incorporated upgrading the halo ore by beneficiation based on preliminary test work results obtained by METS under Snowden s aegis. Further internal desk top studies are being undertaken to look at various exploitation options for Tembang. Tembang project and Jambi IUPs SUMATRA COPPER & GOLD plc ANNUAL REPORT

7 Due to the premature suspension of operations, the majority of the resource identified by the prior operator remains in situ. The Company s subsequent drilling and re modelling in , with lower cut off grades appropriate to the present gold price, approximately doubled the original pre mining resource. Current drilling is expected to add more ounces, and upside is also represented by the adjacent and surrounding exploration targets. Due to the large data base these are reasonably well understood. There are also some 9.0 million cubic metres of waste dumps containing significant quantities of halo mineralisation mined and discarded by the last operator. Resources and Reserves As detailed in the following table, a JORC reported Mineral Resource totalling 1.64 million ounces of gold and 19.8 million ounces of silver has been estimated at the Tembang project: Gross Net Attributable to SUM Project Type Category Mt TEMBANG Vein Halo Au g/t Ag g/t Au Moz Ag Moz Mt Au g/t Ag g/t Au Moz Ag Moz Measured Indicated Inferred Sub Total Indicated Inferred Sub Total TOTAL Notes: The cut off grade for Tembang is 0.50 g/t Au for the vein mineralisation and 0.35 g/t Au for the halo mineralisation. The net attributable to Sumatra amounts to 92.5% of the gross Mineral Resource and rounding errors may occur. In addition, as detailed in the following table, an Ore Reserve reported to JORC Code standard of 0.5 million ounces of gold and 7.2 million ounces of silver has been estimated at the Tembang project: Gross Net Attributable to SUM Project Type Category Mt TEMBANG Vein Halo Au g/t Ag g/t Au Moz Ag Moz Mt Au g/t Ag g/t Au Moz Ag Moz Proved Probable Sub Total Proved Probable Sub Total TOTAL Notes: The cut off grade for Tembang is 0.48 g/t Au for the vein mineralisation and 0.36 g/t Au for the halo mineralisation. The net attributable to Sumatra amounts to 92.5% of the gross Ore Reserve and rounding errors may occur. The resource tabulated above was independently generated by Snowden Mining Industry Consultants as part of a Pre Feasibility Study (PFS) that was concluded in May The PFS also resulted in the definition of the Ore Reserves. 10 SUMATRA COPPER & GOLD plc ANNUAL REPORT 2009

8 Exploration Activities Field mapping, which was undertaken throughout the year, together with data from the Company s drill cores and a re evaluation of historical data sources, is being used to build a revised geological interpretation and model for the Tembang project. This is an iterative process involving progressive updates as new data is generated. The current understanding suggests a gently folded structure to account for the repetition of lithological units, rather than the block faulted historical interpretation. Mineralisation is associated with a fracture system featuring andesitic dykes and (barren) hydrothermal breccias prior to the emplacement of quartz veining. Cross cutting relationships and mineralogy reveals that there are at least three types of veining, with the gold and silver hosted principally by the first (Type 1) and particularly the second (Type 2) phase of quartz veining. Better gold grades are often associated with the intersections of the more northerly with north easterly trending veins and in areas where veins display slight jogs in direction. The veins often follow the contact of the andesite dykes, where again changes in orientation and dip can lead to enhancements of grade. In addition to the lithological and structural model a three dimension model of alteration has also been completed, and this is giving further insights into the centres for mineralisation. Work is now in progress to complete a model for the halo mineralisation, the swarm of narrow, often high grade veining, which is found in both the hanging wall and footwall to the principal (main) veins. An ongoing field mapping project to measure the percentage occurrence and orientations of the mineralised halo veins will result in a better constrained model for this style of mineralisation. This, together with the results of new drill holes will be used to determine a new resource estimate in the third quarter of In November 2009 a drilling contract for 5,000 metres of diamond and reverse circulation ( RC ) drilling was signed with a PT. Parts Sentra Indomadiri. Drilling started in January 2010 with several objectives. The principal objective is to test the down dip potential of the higher grade veins at Bujang, Belinau and Buluh. A second objective is to obtain better geological definition of the halo mineralisation, and to obtain samples of this material for further metallurgical test work on the applicability of beneficiation to upgrade the halo ore. Tembang 3D geological and alteration modelling SUMATRA COPPER & GOLD plc ANNUAL REPORT

9 The program is ongoing at the time of writing. Results received to date, which have been reported in full by the Company and are posted on the Company s website, show that the vein mineralisation does generally extend deeper than established by prior drilling, with particularly good results at Belinau. Tembang 2010 Resource Drilling Significant Intersections Au >0.35 g/t 20/3/10 Hole No Location Type From To Length Au g/t Ag g/t RDD10044 Bujang Halo RDD10044 Bujang Halo RDD10044 Bujang Vein RDD10044 Bujang Vein RDD10045 N. Buluh Halo RDD10045 N. Buluh Halo RDD10045 N. Buluh Vein RDD10046 N. Buluh Vein RDD10046 N. Buluh Vein Barren RDD10047 N. Buluh Halo RDD10047 N. Buluh Halo RDD10047 N. Buluh Halo RDD10047 N. Buluh Halo RDD10047 N. Buluh Vein RDD10048 Belinau Halo RDD10048 Belinau Vein RDD10048 Belinau Vein RDD10049 Bujang Halo RDD10049 Bujang Halo RDD10049 Bujang Vein RDD10049 Bujang Vein RDD10049 Bujang Halo RDD10050 S. Buluh Vein RDD10051 Belinau Vein Hole RDD10048 at Belinau, intersected the main vein at metres depth downhole, and returned g/t Au and 17.0 g/t Ag, with a hanging wall intercept giving g/t Au and 6.0 g/t Ag. Hole RDD10051 drilled 50 metres along strike north of RDD10048 returned g/t Au and 29.4 g/t Ag, from a depth of metres depth downhole. Modelling the vein s grade and thickness demonstrates continuity to the higher grades indicating the presence of an ore shoot. These are not uncommon in epithermal systems and were identified by the prior operator at Tembang. They also occur at Way Llingo on the Kingrose property in South Sumatra and at the Company s Tandai property. What is significant is that this higher grade zone might be accessed early (for example by underground) and blended with lower grades from open pits on other parts of the property, resulting in higher average head grades entering the plant. 12 SUMATRA COPPER & GOLD plc ANNUAL REPORT 2009

10 Long section through Belinau showing drill pierce points with results tabulation SUMATRA COPPER & GOLD plc ANNUAL REPORT

11 Field mapping, which was undertaken throughout the year, together with data from the Company s drill cores and a re evaluation of historical data sources, is being used to build a revised geological interpretation and model for the Tembang project. 14 SUMATRA COPPER & GOLD plc ANNUAL REPORT 2009

12 Results from the three holes at Buluh North would indicate that mineralisation, whilst present, is beginning to weaken at depth, however one intercept from the central hole in the main vein returned g/t Au and g/t Ag indicating good continuity at depth in this section. All results to date are for diamond drill holes, with core being either PQ or HQ in size. Core samples were halved with a diamond saw with one half core submitted to Intertek Caleb Brett Laboratories in Jakarta for analysis; gold analysis by 50 gram fire assay, silver by AAS. The results from the current phase of drilling, and their integration with the definition of the halo mineralisation, both mapped at surface and modelled, will contribute to an upgraded resource expected in the third quarter of Geology map of the Tembang vein system showing location of drill holes SUMATRA COPPER & GOLD plc ANNUAL REPORT

13 Tandai Project The Tandai project is located approximately 100 kilometres north of Bengkulu. The Company has rights to a 92.5% economic interest in an IUP (384 Tahun 2009) totalling an area of some 1,000 km² over a district in which at least three Dutch companies worked portions of the large Lebong Tandai system, a former underground mine that produced 1.4 million ounces of gold and 15 million ounces of silver at grades of 15.4 g/t Au and 167 g/t Ag. 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 first redeveloped and then re opened between 1985 and The old mine continues to be accessed by means of 35 kilometres of rail track laid by the Dutch at the turn of the last century. During the last decade there has been extensive development of palm oil plantations within the area, and this now brings vehicular access to within 10 kilometres of the property. Tandai is a high grade, epithermal intermediate sulphidation system, with gold silver mineralisation hosted by a series of veins and breccias distributed over a vertical extent exceeding 500 metres and more than 5 kilometres of strike. Despite the long history of production, geological consultants CSA Global Pty Ltd independently estimated the presence of multi million ounce exploration target potential. This is based on work conducted by the Company and which demonstrates formal pre and post WWII mining to have only exploited a modest portion of this unusually large hydrothermal system. Historic formal production was from underground, where highest grades were mined from mineralised structures and lower values were left in situ. The Company s exploration confirms the presence of sub parallel structures north (Toko Rotan) and south (Glumbuk) of the exploited central Tandai vein system. These two structures were known to the Dutch. Tandai project IUP 16 SUMATRA COPPER & GOLD plc ANNUAL REPORT 2009

14 Some exploration was conducted pre WWII on these structures, with limited production from the latter; however, despite the substantial increase in the gold price, the Company is the first to conduct systematic exploration beyond the Tandai structure. High grade discoveries are more likely to occur within the unmined Glumbuk or Toko Rotan features. Prospectivity is further enhanced by the Company s exploration results and artisanal activity, both of which demonstrate that locally there occur significant values at surface, representing up dip continuations of the material stoped from underground. The long section of the old mine identifies bonanza grades locally occurring very close to surface. Such grades also occur at considerable depth, and the marked vertical extent to Tandai s mineralisation reflects its intermediate sulphidation nature. Clearly, new discoveries of such high grade could support a new underground operation if of sufficient tonnage. The distribution of higher grades is deemed to reflect the both the presence of ore shoots, and disruption by post mineral faulting and which is well documented in the Dutch records. The Company s future exploration will focus on discovering high grade material, and geometry indicates the majority will lie at depths that can only be developed from underground. However, a spectrum of exploration targets is represented on the property as some of the shallower mineralisation may be open pittable, and peripheral lower grades and cross structures may very well result in some of this bulking up. Tandai veins showing location of Glumbuk and Toko Rotan SUMATRA COPPER & GOLD plc ANNUAL REPORT

15 Exploration Activities During the reporting period the Company s activities have been both in the field and in Holland where the archives are being researched by a team of post graduate students supervised by a consulting geologist who has worked in the field at Tandai. Both of these activities have upgraded the project s potential, and the Company expects new drill targets to be identified during In Holland, 34 years of continuous annual reports have been located for two of the three companies that mined Lebong Tandai and its extensions along strike. The Dutch data located in Holland is of a summary nature representing concise material of the type to be included in management type reports. We are advised some of the raw data from which this is derived can still be found in Indonesia and this will be sought at a later date. These reports and associated plans and sections are sufficiently comprehensive as to allow the later expansion of the 3D geological model already developed in Datamine. By integrating the pre WWII data with that generated by the Company, the controls on zonation, mineralisation and grade distribution will be better understood. Post mineral offsets to ore are specifically identified, and this will help better understand the structural framework and possibly including the location of the western continuation to the Tandai orebody, and which is understood to have been faulted off. There also are indications the principal control on mineralisation is not necessarily east west. The improvement in the understanding of Tandai will result in more cost effective exploration, particularly of the notably underexplored Glumbuk and Toko Rotan structures. Field activities at the Tandai project have concentrated on geology and geochemistry. 18 SUMATRA COPPER & GOLD plc ANNUAL REPORT 2009

16 Exploration of the three kilometre long portion of the Glumbuk structure within the Company s ground has commenced. Surface mapping of alteration has confirmed the westward continuation of the Glumbuk structure, even though it has little surface expression. Clay silica alteration has so far been traced for a distance of some 1.5 kilometres. The zone of alteration is thought to indicate the continuation of epithermal mineralisation beneath a cover of less receptive sedimentary host rocks. Float samples of quartz veins collected from the Sungai Landai drainage to the immediate north of the Glumbuk structure returned a best result of 21.0 g/t Au and 91.8 g/t Ag. In addition, channel sampling of a quartz vein in the hanging wall to the Glumbuk system exposed near the Sungai Aswan drainage gave g/t Au and 160 g/t Ag. Although exploration has only just started, these results are already encouraging. During 2010 systematic exploration will be conducted on a task force basis. Following integration of the Dutch and more recent data, the improved understanding on the controls on mineralisation will be applied to the system as a whole. Despite extending for 3 kilometres in a north south and 4 kilometres in an east west sense the system is open in all directions. The extent will be delimited with the results from the drainage geochemical sampling and then followed up by systematic ridge and spur and subsequent gridded soil geochemistry. Geological mapping will be conducted at relevant scales, and channel samples collected with the objective of promptly identifying targets for drilling. Plan showing extent of alteration at Glumbuk and location of samples SUMATRA COPPER & GOLD plc ANNUAL REPORT

17 The improvement in the understanding of Tandai will result in more cost effective exploration, particularly of the notably underexplored Glumbuk and Toko Rotan structures. 20 SUMATRA COPPER & GOLD plc ANNUAL REPORT 2009

18 Sontang Project The Company has rights to a 92.5% economic interest in an IUP (188.45/1178/BUP PAS2006) totalling almost 250 km² located in the regency of Pasaman in the province of West Sumatra, approximately 160 kilometres north of Padang, and immediately adjacent to the boundary with the province of North Sumatra. North Sumatra is host to the advanced gold projects of Martabe and Sihayo Gold. The Sontang project comprises a notable virgin discovery by the Company s geologists. The large hydrothermal system is related to intrusive activity, and the geological setting is particularly favourable as the intrusive(s) have been emplaced in a lithological package that hosts receptive calcareous beds including limestone and their metamorphosed equivalents. Exploration remains at an early stage but mineralisation of economically significant grade has already been identified in several of these receptive units. To date, two distinct types of auriferous mineralisation have been found within this stratigraphy and these are high grade polymetallic manto bodies and replacement type silicified sediments ( jasperoid ). The latter type was mined previously in Indonesia by Newmont at the Mesel mine in Sulawesi and currently is being advanced towards feasibility by Sihayo Gold. The geological nature of the Sontang hydrothermal system is such that additional styles of mineralisation are expected to be identified as exploration progresses. Hydrothermal alteration and mineralisation is dispersed over an area known to extend approximately 2 kilometres along strike, and remains open in both directions. Elevated values of gold, silver and base metals (zinc, lead and copper) were frequently encountered during the first phase of rock chip sampling with maximum values of 24.5 g/t Au, 1,000 g/t Ag, 12.2% Pb and 30.8% Zn. The styles of mineralisation and alteration are starting to define a zonation suggestive of a temperature gradient increasing north westwards, and where an intrusive source would therefore be interpreted. Sontang project IUP SUMATRA COPPER & GOLD plc ANNUAL REPORT

19 Exploration Activities Exploration activities at Sontang during the year saw the completion of the reconnaissance program of regional stream sediment sampling over the whole Sontang IUP, and to an approximate density of 1 sample per 2.5 km 2. In total this program resulted in the collection of some 124 stream sediment samples and the results have identified drainage catchments that are commonly anomalous in different elements, most probably reflecting primary zonation within the system. At the reconnaissance level, an area extending across 50 km 2 defines the extent of the contiguous anomalous catchments that host the area of mineralisation identified to date. Follow up sampling will better define the sources causing the anomalous drainage and exploration will subsequently focus within a smaller area. Primary gold bearing mineralisation located in outcrop in East and Central Sontang is already known to be the cause of some of the drainage anomalies, and confirming the effectiveness of this reconnaissance technique. Geochemistry at Sontang, and in fact across all the Company s projects, is a very powerful exploration tool. As the drainage sampling moves towards completion, soils are the media now being sampled in detail. Preliminary work on a grid at East Sontang, and ridge and spur elsewhere, demonstrates there are soil anomalies associated with the outcropping mineralisation and that the anomalies indicate extensions to the known mineralisation and they still remain open. To date, a single style of mineralisation has been identified in East Sontang. Massive polymetallic sulphides occur as irregular bodies within limestone and the weighted average metal contents for 54.8 metres of rock channel samples collected in this area is 2.87 g/t Au, 118 g/t Ag, 0.57% Pb and 5.66% Zn. The best intercept returned g/t Au, 56.9g/t Ag, 8.38% Zn and 0.16% Zn and these massive sulphides are interpreted to be an example of manto style mineralisation comparable to those that occur commonly in Central and South America. Drainage anomalies at the Sontang project 22 SUMATRA COPPER & GOLD plc ANNUAL REPORT 2009

20 In contrast to East Sontang, exploration in the Central area has already identified two distinct styles of gold mineralisation. An additional example of (gossanous) manto type massive sulphide mineralisation has been located and is comparable to that at East Sontang which is more than 500 metres away. Recent sampling returned g/t Au, 765g/t Ag, 8.3% Pb and 1.78% Zn, and true width is estimated to be 8.5 metres. Manto sulphides at Central and East Sontang are both within the same stratigraphic package, and there may very well be some continuity in the mineralisation between the two areas. The second style of mineralisation in Central Sontang is related to the passive silicification of part of the sedimentary package, and interpreted to have previously been calcareous. The resultant jasperoid is not a common form of mineralisation however two important examples are documented in Indonesia. Newmont Mining s 2 million ounce Mesel orebody which was mined in North Sulawesi in the 1990s is one example, the second lies on lands to the north of Sontang where Sihayo Gold are advancing a 1 million ounce resource towards feasibility. The best developed examples lie on the famous Carlin Trend in north east Nevada, and from where the majority of North America s gold has been mined. Recent research on jasperoids reveals the gold mineralisation to be distal to magmatic input. The more than 4 metre wide zone of dark grey, cryptocrystalline, jasperoidal silica is exposed in a creek at Central Sontang, but lies almost 100 metres north of the massive sulphides. The available outcrop returned values of 2.63g/t Au and 6.75g/t Ag over the 4 metre interval. Characteristically, this style of mineralisation has a low base metal content but elevated arsenic. The mineralisation lies on the edge of a NW SE trending gold soil anomaly, which has been delineated at +25 ppb and +50 ppb Au contour levels. The anomaly is strongly associated with the limestone complex, and already extends over 1,000 metres by 200 metres but has not yet been closed off. SUMATRA COPPER & GOLD plc ANNUAL REPORT

21 Recent activity at Sontang during January and February 2010 has focussed on tracing mineralisation along strike from Sontang East north westwards to the Sontang Central and Sontang West prospects with a program of ridge and spur soil sampling at 25 metre intervals with concomitant geological mapping. Soil sampling along a ridge in the headwaters to a creek draining an altered intrusive have returned encouraging results from Sontang West which is more than one kilometre from the Sontang East massive sulphides. Results to date define more than 400 metres of anomalous values with maxima of 0.28% Pb, 0.16% arsenic and 0.11% Zn in the soils. The soil anomaly has not been closed off, and rock chip sampling has yielded results of up to 1.17 g/t Au, 1,230 g/t Ag, 10.3% Pb and 0.08% Zn from quartz veined subcrop within the area of anomalous soils. This mineralisation is associated with silica clay alteration and there may be an intermediate to high sulphidation affiliation particularly as copper and arsenic are broadly coincident. This interpretation is indicative of a third style of gold mineralisation on the property. The +110 ppm Cu (maximum 420 ppm Cu) and +140 ppm As (maximum 4,020 ppm As) results define an area that already is 400 metres by 400 metres in size. All of the mineralisation discovered has a magmatic affinity, and zonation indicates the intrusive source to be to the north west. This is the area where early exploration in 2007 identified float of potassically altered porphritic diorite bearing the copper minerals of chalcopyrite and covellite. This occurrence may later prove to be an important indicator of Sontang s ultimate nature. 24 SUMATRA COPPER & GOLD plc ANNUAL REPORT 2009

22 Ongoing exploration during 2010 will focus on advancing the property with the objective of drilling before year s end. The property is likely to host several drill targets and exploration will be advanced systematically in order to cost effectively identify highest priority targets. The association of gold with conductive base metal sulphides in the mantos may result in the application of electrical geophysical techniques, as this should assist in the siting of drill holes to test this irregular style of mineralisation. SUMATRA COPPER & GOLD plc ANNUAL REPORT

23 Lebong Project During the year there has been no exploration work carried out on this project owing to an overlapping claim dispute that is not resolved. Lebong was originally held by the Company under a 2,500 km² SIPP (preliminary stage of a Contract of Work) together with Tandai. Tandai has been split off and an IUP under the new Mining Law granted to a new PMA subsidiary company, PT Bengkulu Utara Gold. In respect of Lebong an application for a 768 km² IUP has been lodged with the Bengkulu provincial authorities by PT Lebong Gold, another PMA subsidiary company formed by the Company. Our entitlement is based on the original approvals and grant of the SIPP by the Governor of Bengkulu. The dispute arose because the Regent of the regency of Lebong issued KPs under the old Mining Law to third parties that overlap the Company s SIPP area. Every effort is being made to see our entitlement reflected in the grant of an IUP under the new Mining Law. 26 SUMATRA COPPER & GOLD plc ANNUAL REPORT 2009

24 Other Exploration Prospects The Company has three other exploration properties, one in Jambi Province and two in North Sumatra. As shown on the map above, the Jambi prospect is secured by an IUP (495/Kep Gub/ESDM/2009) which covers 975 km² and in which the Company has a 92.5% economic interest. The original area was selected on the basis of numerous alluvial gold occurrences, and favourable geology. Prior to conversion of the original SIPP to an IUP, the Company s geologists conducted a program of reconnaissance drainage sampling and the IUP boundary reflects retention of all the significantly anomalous land. The tenement is along strike from the Tembang mine and its peripheral Tertiary age epithermal and porphyry related gold mineralisation. Erosion within the Jambi tenement has locally exposed the geology of the basement Sundaland craton and which predates the Tertiary magmatic arc. In peninsular Malaysia, this craton hosts orogenic gold mineralisation, including the >1 million ounce Penjom mine, and this upgrades the tenement as it represents an additional style of mineralisation that may be present. Locally coincident gold and arsenic drainage anomalies may be explained either by this, or epithermal mineralisation of the type being advanced at Tembang. The Company s geologists have not yet followed up these reconnaissance anomalies. The North Sumatra prospects are held by two IUPs (540/033/K/2010 and 540/034/K/2010) adjacent to Sihayo Gold s Contract of Work which cover 97 km² and in which the Company has a 92.5% economic interest. These are greenfields programs and only limited exploration work has been undertaken to date. SUMATRA COPPER & GOLD plc ANNUAL REPORT

25 Competent Person The information in this report that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by David Stock, geologist, who is a Member of the Australasian Institute of Mining and Metallurgy. David Stock is a consultant to 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. David Stock has consented to the inclusion in this report of the matters based on his information in the form and context in which they appear. 28 SUMATRA COPPER & GOLD plc ANNUAL REPORT 2009