Despite adverse recent weather conditions, gold production at G-Resources Group’s Martabe gold project in North Sumatra, Indonesia, is still targeted for 2011 at a rate of 250,000 oz/y gold and 2 to 3 million oz/y of silver at an anticipated cash cost of $280/oz of gold. The company said unusually high rainfall has resulted in a review of the best location for certain facilities at the project. Under an Ausenco contract, Martabe is now at about 60% engineering completion. G-Resources will soon award contracts for aircraft charter, the mine drill and blast contract, and the mining contract. A Letter of Intent has been issued for the mining contract, which is valued at about US$150 million over five years. To date, contracts totaling about $91 million have been awarded.
The project proceeds under a Contract of Work (COW) which defines the terms, conditions and obligations of both the company and the Government of Indonesia.
G-Resources aims to increase production to more than 1 million oz of gold annually through exploration of the COW area and through acquisition of other quality gold assets. Five mineralized prospects have been identified at Martabe: Pit 1, Ramba Joring, Barani, Tor Uluala and Uluala Hulu.
Martabe, with a resource base of 6.5 million oz gold and 66 million oz silver, is G-Resources Group’s core starter asset. The company said it has delineated initial Ore Reserves at the Barani deposit of 4.5 million mt at 1.6 g/t gold and 2.8 g/t silver for 225,000 oz of gold and 412,000 oz of silver. This does not include the Ramba Joring or Uluala Hulu deposits which contain a total of 1.26 million oz of gold and 6.12 million oz of silver in Mineral Resources.
Metal price assumptions for the Ore Reserve calculations were US$820/oz for gold and US$12.50/oz for silver.
The company said drilling is yet to test the full extent of the Martabe deposits and significant potential exists to further increase gold and silver ore reserves. It said the Martabe project site is only a small part of a much larger contract of work area covering 1,639 km2.