Sumatra Copper & Gold announced that it has temporarily suspended open pit mining activities at its Tembang gold-silver operation located in southern Sumatra, Indonesia.
Image: Silver bullion bar 1000oz top view. Photo courtesy of Unit 5/Wikipedia.
With the scheduled completion of the Berenai open pit mine this month, the majority of the remaining open pit reserves are contained within the lower grade Asmar orebody. Under Tembang’s current cost structure and the prevailing gold price, Asmar is marginally profitable.
As previously announced, the proposed connection of Tembang to the State-owned electricity grid later this year will result in considerable reductions to power charges (from US$0.26 / Kwh to approximately US$0.09 / Kwh) with expected savings in processing costs, underground mining costs and administration.
During this intervening period, the Company has decided to terminate the Open Pit Equipment Hire Contract and anticipates mining will restart in the fourth quarter with a lower cost, bulk mining arrangement.
The lower processing costs from grid power and a new open pit mining arrangement will allow the Asmar pit to be reoptimized at a lower cut-off grade. This will also potentially allow the significant Inferred Resource at Asmar to be targeted for conversion to reserves.
Accordingly, the company has lowered its 2018 production guidance to 37,500 – 42,500 oz AuEq from 45,000 – 55,000 oz AuEq reflecting the temporary suspension of open pit mining.
Sumatra Copper & Gold chief executive officer Rob Gregory commented: “Whilst there will be a short term loss in production, our decision to temporarily suspend open pit mining will significantly improve the profitability of the Asmar orebody and secure the near term future of the operation.”
Source: Company Press Release