PERTH (miningweekly.com) – Junior miner Sumatra Copper & Gold has secured a $5-million working capital facility from its major shareholder Provident Minerals to fund operating costs, and underground and openpit development at the Tembang gold-silver mine, in Indonesia.

Sumatra would issue five-million convertible notes to Provident Minerals, with a face value of $1 each, to raise the funds. Interest on the convertible notes was 10% a year.

The convertible notes would be issued in two tranches, with the second tranche subject to shareholder approval.

The convertible notes would mature immediately after the maturity date of an existing $45-million senior secured debt facility, which was November 10, 2017.

The noteholder could elect to convert the notes into CHESS depository interests (CDIs) at an exercise price of A$0.057 per CDI, at the Australian/US dollar exchange rate on the day preceding the date of the conversion notice. It was estimated that the conversion would result in the issue of some 161.2-million CID’s equating to a 23% increase in Sumatra’s current CDIs on issue.

Sumatra has meanwhile also entered into a working capital loan facility with Provident Minerals worth up to $3-million, which would be repaid at the earlier of the issue of the second tranche of the convertible notes, or on the maturity date of the convertible notes.

The working capital facility would also have an interest rate of 10% a year.

Sumatra recently started underground production of high-grade ore at the Tembang project, after first gold pour was achieved in September.

The development of the openpit mines was progressing as planned, with the Berenai and Asmar pits supplying the majority of the ore currently being processed at the plant.

At full production, Tembang was expected to produce about 33 000 oz/y of gold and 345 000 oz/y of silver at a cash operating cost of $470/oz.