PERTH (miningweekly.com) – ASX-listed Sumatra Copper & Gold on Thursday reported that it was on the verge of securing a $21-million senior secured debt facility to fund the development of its Tembang gold project, in Indonesia.
The total funding package for the project development was estimated at $45-million, of which $21-million would be funded through the debt facility and the remaining $24-million would be funded with equity.
Sumatra told shareholders that it was seeking credit committee approval with an internationally recognised bank for the debt facility, adding that it would require mandatory hedge cover for up to 50% of gold and 80% of silver produced at Tembang, for an anticipated four-and-a-half-year loan life.
The company was hoping to secure credit committee approval for both the debt facility and the planned equity raise by July this year. An extraordinary general meeting would be called in late July to allow shareholders to vote on a A$27-million equity raising.
Meanwhile, Sumatra has told shareholders that it has also signed a variation of the convertible loan facility with shareholder Provident Minerals to increase the facility by $500 000 to $5.1-million. The additional funding had been fully drawn down for working capital.
A recently updated definitive feasibility study on Tembang forecast a total production of 168 794 oz of gold and about 1.8-million ounces of silver, with the processing rate unchanged at 400 000 t/y. The project was now 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.
A further $33.6-million in capital expenditure would be required to complete the construction of the project, with the total capital cost of Tembang now estimated at $71.3-million of which $19.5-million had been spent to date.
Project construction would restart by mid-2014, with first production targeted for mid-2015.