Investment summary

Sumatra has announced a number of key catalysts. First is a reserve statement based on its resource base at Tembang, totalling 5.5Mt @2.3g/t Au and 31.4g/t Ag for 513koz AuEq. This is a critical milestone to developing Tembang as a mine. A further 73koz Au and 890koz Ag remains in peripheral sheeted veins to provide upside to the current Stage 1 life of mine of five years. Also, significantly, a revised mine optimisation plan details a 55% reduction in capex to US$10m; a 39% increase in mined AuEq ounces of 189k; a reduction in construction time to six months; initial open pit mining at Belinau, followed by Asmar open pit development concurrently with underground mining at Belinau (post open pit works); and acquisition of the pre-existing (and highly efficient) process plant designs from AMEC. We look to revise our valuation on account of these factors shortly.

Last updated on 23/04/2012

Industry outlook

We will look to use Au prices of US$1,700/oz (2012), US$1,600/oz (2013) and US$1,350/oz thereafter in our upcoming valuation.

Last updated on 23/04/2012