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Sumatra completes hedging deal for Tembang

3rd November 2014

By: Esmarie Iannucci

Creamer Media Senior Deputy Editor: Australasia

  

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PERTH (miningweekly.com) – Gold hopeful Sumatra Copper & Gold have ticked off a condition to its $45-million funding facility with Nomura Singapore and Indonesia Eximbank, announcing on Monday that it had completed a hedging programme for 50% of the gold and silver production during the first two years of operations at its Tembang gold project, in Indonesia.

Some 42 000 oz of gold was hedged at a strike price of $1 108.50/oz, if at the time of delivery the gold price was below $1 428.50/oz. If the gold price traded above this, Sumatra would receive a gold price equivalent to the prevailing gold price, less $320/oz.

A further 343 200 oz of silver was hedged at a strike price of $14.47/oz, where the silver price at the time of delivery was below $21.77/oz. If the price of silver was trading above this, Sumatra would receive a silver price equivalent to the prevailing price, less $7.30/oz.

Deliveries under the hedge programme would start in November next year, with equal monthly deliveries of gold and silver.

Sumatra said that the hedge programme represented around 23% and 16% respectively of the company’s gold and silver ore reserves.

The 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, at a processing rate of 400 000 t/y. The project is 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.

Meanwhile, Sumatra said that the remaining conditions precedent to the drawdown of the facility would be completed in the near-term and the drawdown of an initial $40-million of financing would occur in the first half of this month.

Edited by Creamer Media Reporter

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