The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region
Issue link: https://asiaminer.epubxp.com/i/632337
18 | ASIA Miner | Volume 13 • Issue 1 | 2016 Indonesia SUMATRA Copper & Gold plc has obtained a US$5 million working capital facility for its Tembang Gold-Silver Project in South Suma- tra in the form of convertible notes provided by major shareholder Provident Minerals Pte Ltd. The funds will provide additional working capital as the company boosts production. The gold and silver head grade at the new processing plant has been progressively increasing as planned as additional higher grade ore is accessed from the Belinau underground mine and the open pits. However, a shortfall in supply of high grade ore during the fourth quarter of 2015 due to the combined effect of commissioning the processing plant eight weeks ahead of schedule, the earlier than anticipated ramp-up of the plant to nameplate capacity, a delay in the permitting and delivery of explosives and a delay to the ex- pected timing of VAT refunds has resulted in a need for additional working capital. The company has, therefore, entered into an agreement with Provident to issue 5 million convertible notes each with a face value of US$1. Annual interest on the notes is 10%, is capitalised and forms part of the face value of each convertible note. The convertible notes mature immediately after the maturity date of the US$45 million senior secured debt facility entered into by the company's wholly-owned subsidiary, PT Dwinad Nusa Sejahtera, with Nomura Singapore Limited and Indonesia Eximbank. The ma- turity date of the facility is November 10, 2017. Sumatra C&G; managing director David Fowler said, "We are high- ly appreciative of this fnancial support from our major shareholder at this critical juncture. This additional working capital provides the time necessary to achieve steady state gold and silver production during the frst quarter of 2016." During the December quarter the company announced that the southern cutback to the existing Belinau open pit at Tembang had advanced as planned with the frst underground development drive into high grade gold and silver-bearing ore on Level 1. The re-op- timized mine plan provides a second access into the Belinau ore body from underground to deliver additional high grade feed to the processing plant. Gold and silver assay results received up to November 20 from grade control face channel samples along this ore drive exceeded resource model estimates and confrmed the high grade nature of the deposit even at the outer margins of the resource. STATE-OWNED mining company PT Aneka Tambang, or Antam, has announced a new gold-prospecting and extraction partnership with Australia's Newcrest Mining. The companies will share techni- cal and legal resources exploring mines across Indonesia, including in East Java, North Sulawesi and South Sumatra. Antam is keen to boost production from its own mines for proft- ability and believes Newcrest, which already has a joint investment with Antam in the Gosowong Gold-Silver Project in North Maluku, has the expertise to bring this to fruition. Antam president Tedy Badrujaman said the cooperation was in- tended to beneft Antam's gold portfolio and business expansion. Antam moved to strengthen its gold business after the Indone- sian government banned nickel ore exports in 2014, pushing the company to a net loss for the year. In the frst nine months of 2015 Antam sold 12,648kg of gold which generated more than 70% of its consolidated revenue. However, the company only produced about 1700kg from its mines in West Java and Banten with the bulk of sales sourced from third parties. Antam also recently formed a strategic partnership with PT Bank Maybank Indonesia which involves a US$100 million fnancing fa- cility. Antam will use the facility to support the development of its Pomalaa Ferronickel Plant Expansion Project in Southeast Sulawesi as well as to support fnancing of general capital expenditure and corporate purposes. The expansion of the ferronickel plant aims to increase Antam's annual ferronickel production capacity from 18,000-20,000 tonnes of nickel contained in ferronickel to 27,000-30,000 tonnes. The project also aims to increase the effciency of the smelter and in- cludes development of a 2x30MW coal-fred power plant. The fnancing facility is based on the Musyarakah Sharia principle and has a 10-year term with payment of proft-loss sharing every three months based on agreed arrangements. The facility fnancing received from Maybank Indonesia suffciently covers the require- ments of funding for the expansion project. As of end of November 2015, the EPC progress of the project had reached 98.36%. Antam has also signed an MoU with Aluminium Corporation of China to develop a smelter-grade alumina refnery in Mempawah, West Kalimantan. The agreement will rejuvenate the $1.8 billion project which has been on the back burner since the end of 2014 due to funding diffculties. The smelter will consume 6 million wet metric tonnes of bauxite ore annually from the company's nearby Mempawah mine and have the capability to produce 2 million tonnes of alumina a year. Antam and Newcrest in new partnership The processing facilities at Sumatra Copper & Gold's Tembang Gold-Silver Project in South Sumatra. Working capital funds for Tembang