PERTH (miningweekly.com) – ASX-listed Sumatra Copper & Gold has formed a strategic alliance with Indonesian gold producer Merdeka Copper Gold to extend the mine life and possibly increase production from the Tembang gold/silver operation, in Indonesia.
Merdeka will fund ongoing exploration work at Tembang, spending an initial $1.5-million over the next six months. In turn, Sumatra will issue chess depository interests (CDIs) to Merdeka at a price representing the five-trading day volume-weighted average price of Sumatra shares prior to a formal agreement on an exploration programme.
The CDIs will be issued to Merdeka in tranches based on the exploration spend during each three-month period, with the first quarter concluding on November 30.
Sumatra told shareholders on Monday that Merdeka ultimately intended to spend up to $10-million in stages at Tembang, under similar terms for each successive approved exploration programme, subject to ongoing exploration success.
“The potential to increase resources and reserves at Tembang has long been recognised, but to date the company’s focus has been on production,” said chairperson Jocelyn Waller.
“With this strategic alliance with Merdeka, the company now has a strong local partner to enable the discovery process to be expedited. It’s a significant and positive development for the company that will add value.”
During the six months to June, the Tembang mine produced 11 263 oz of gold and 80 775 oz of silver, with production affected by the lower-than-planned production volumes from the Beranai openpit, and a delay in starting stoping from the Belinau underground mine.