SUMATRA COPPER & GOLD PLC
2015
SUMATRA COPPER &
GOLD PLC
ANNUAL FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2015
SUMATRA COPPER & GOLD PLC | LEVEL 1, 5 ORD STREET, WEST PERTH WA 6005, AUSTRALIA ABN 14 136 694 267
REGISTERED IN ENGLAND AND WALES | 39 PARKSIDE, CAMBRIDGE CB1 1PN UNITED KINGDOM REGISTRATION NUMBER 5777015
Corporate Directory
DIRECTORS
Stephen Daniel Robinson (Non-Executive Chairman) David Fowler (Managing Director)
Adi Adriansyah Sjoekri (Executive Director)
Jocelyn Severyn de Warrenne Waller (Non-Executive Director) Gavin Arnold Caudle (Non-Executive Director)
COMPANY SECRETARY
Mark Satterly (United Kingdom) - appointed 31 July 2015 Susan Hunter (Australia)
REGISTERED OFFICE
39 Parkside Cambridge CB1 1PN United Kingdom
AUSTRALIAN OFFICE
Level 1, 5 Ord Street West Perth WA 6005 Australia
Phone: +61 8 6298 6200
BANKERS
HSBC Bank plc 69 Pall Mall
London SW17 5EY United Kingdom
National Australia Bank 1238 Hay Street
West Perth WA 6005 Australia
CHARTERED ACCOUNTANTS AND STATUTORY AUDITORS
BDO LLP
55 Baker Street London W1U 7EU United Kingdom
SHARE REGISTRY
Computershare Investor Services Pty Limited Level 2, 45 St George's Terrace
PERTH WA 6000
Phone: 1300 552 270 (within Australia)
Phone: +61 3 9415 4000 (outside Australia)
WEBSITE
www.sumatracoppergold.com
ASX CODE
SUM
Contents
|
Strategic Report
|
1
|
|
Directors' Remuneration Report
|
7
|
|
Directors' Report
|
8
|
|
Independent Auditors' Report
|
17
|
|
Consolidated Statement of Comprehensive Income
|
19
|
|
Consolidated Statement of Financial Position
|
20
|
|
Consolidated Statement of Changes in Equity
|
21
|
|
Consolidated Statement of Cash Flows
|
22
|
|
Notes to the Consolidated Financial Statements
|
23
|
|
Parent Entity Financial Statements
|
59
|
Directors' Report
Strategic Report
The Directors of Sumatra Copper & Gold plc ("the Company" or "the Group") present their strategic report for the year ended 31 December 2015.
1. Review of the Business
Sumatra Copper & Gold plc is a gold and silver producer and precious metals explorer in southern Sumatra, Indonesia. The Company's flagship asset is its Tembang gold-silver mine ("Tembang" or "the Project"), currently in production. The Company also has an extensive exploration portfolio with projects ranging from brownfield, near-production opportunities to strategically located greenfield holdings.
Sumatra Copper & Gold plc listed on the Australian Stock Exchange in 2009 (ASX: SUM).
After completing a bankable feasibility study in September 2012 the Company raised US$19.7 million in equity and commenced construction at Tembang in June 2013. However, during 2013 the gold price declined from a high of US$1,690 per ounce to US$1,200 per ounce and, as a result, the Company was unable to complete debt funding. Construction at Tembang was suspended in December 2013 after project expenditure of approximately US$15 million.
Following a further drilling campaign, funded by US$4 million in convertible notes, to define additional Measured and Indicated Resources, the Company announced updated Mineral Resources and Ore Reserves in March 2014 and in April 2014 published a revised Definitive Feasibility Study ("DFS"). The DFS was based on a five-year plan, mining Ore Reserves at a nameplate plant throughput rate of 400,000 tonnes per annum to produce a total of 169,000 ounces of gold and 1.8 million ounces of silver. The forecast C1 cash operating cost was US$470/oz (net of silver credits of US$212/oz) and an All-In-Sustaining-Cost (AISC) of US$745/oz (net of silver credits of US$212/oz). The DFS cash flow was based on a capital investment to complete the Project of US$35.3 million including contingency. This was subsequently revised to US$36.6 million at final board approval to commence the project.
In October 2014 the Company's wholly owned subsidiary, PT Dwinad Nusa Sejahtera ("DNS"), signed a senior secured debt facility of up to US$45 million ("Facility") with Nomura Singapore Limited and Indonesia Eximbank. An initial tranche of US$40 million was drawn down from the Facility in November 2014 and construction re-commenced at Tembang.
Under the terms of the Facility, the Company was required to raise US$5 million in equity in order to utilise the second tranche of US$5 million debt. During 2015 the Company completed the required equity raise of US$5 million and met the other conditions precedent to the second tranche of debt, which was drawn in September 2015.
The Company achieved its first gold pour at Tembang in September 2015, on budget and 8 weeks ahead of schedule, and produced 2,954 ounces of gold and 66,219 ounces of silver to 31 December 2015. The Directors expect Tembang to transition to commercial production during the second quarter of 2016.
Due to the combined effect of the commissioning of the processing plant 8 weeks ahead of schedule, the earlier than anticipated ramp-up of the processing plant to nameplate capacity and a delay in the permitting and delivery of explosives, there was a shortfall in supply of high grade ore during the fourth quarter of 2015. These factors, combined with a delay to the expected timing of VAT refunds, led to a need for additional working capital which was met by entering into a US$5 million working capital facility in the form of convertible notes.
Subsequent to the end of the financial year, on 31 March 2016 the Company announced that it had amended its convertible note facility with its major shareholders to draw down a further US$2.0 million in funding to meet its interest and debt service reserve account requirements. Both major shareholders and debt providers have been supportive in funding the Company to achieve sustainable production levels.
1