Sumatra Copper & Gold plc (ASX: SUM) has upgraded the resource for its Tembang Gold and Silver Project, located in central Sumatra, Indonesia, to over one million ounces gold.The updated resource allows the Pre-Feasibility Study to be completed with the scope of the project finalised for the Definitive Feasibility Study (DFS), scheduled to commence in the second half of 2011. Recent drilling encountered higher grade zones at Belinau and Berenai and has resulted in an overall more robust and higher grade resource of 23.54 million tonnes (Mt) at 1.32 g/t gold and 17.3 g/t silver (Ag).
The Resource update represents a 39% increase in grade from the 2009 resource estimate by Snowden.
In addition to the resource at Tembang, there is a potential underground high grade resource of 130,330 ounces at Belinau. The Belinau deposit represents a potential underground resource of 0.49 Mt at 8.24 g/t gold and 71.8 g/t Ag.
Measured and Indicated Categories now make up 76% of the total resource, from previously being 47%.
Belinau is now analogous to Kingsrose Mining’s (ASX: KRM) Way Linggo mine also in Sumatra. Drilling in 2010/11 has added 99,700 ounces gold and 746,400 ounces Ag at an average grade of 9.17g/t gold and 68.7g/t Ag.
A recently commissioned scoping study by Mining Plus has confirmed the potential viability of mining Belinau by underground means.
The company said the vein component is now 79% of the total resource "mainly due to the decrease in the halo resource and better reflects the most important style of mineralisation in the deposit."
Jocelyn Waller, managing director, said “we now have an overall higher grade resource dominated by vein style mineralisation, and certainly a robust foundation on which to base the mine development."
"At Belinau we have a new high grade resource which looks like lending itself to underground exploitation to supplement and sweeten the open pit feed. It’s now all systems go to take this through feasibility into production.”
A 5,000 metre in-fill drilling program is in progress and on its completion Hellman and Schofield will be commissioned to undertake and sign off on the Resource estimates which will be the basis for the DFS.
The company is targeting annual production of 70,000 to 80,000 ounces gold equivalent at the Tembang Project by early 2013 following a successful resource augmentation drilling program.
The project will have a projected mine life of at least 10 years and anticipated cash costs in the range of US$500 per ounce.
Given Tembang is a brownfields site, it brings a de-risking element to the project and development parameters.
Final mine planning will be undertaken once the infill drilling and definitive resource modelling is completed in mid 2011.
The current schedule is for the DFS to be completed by the end of 2011 and construction to begin, subject to permitting and financing, in the second quarter of 2012. Write by Jeff Coote
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