for personal use only - asx2009/09/15 · for an offer of 60,000,000 cdis for shares at an issue...

For an offer of 60,000,000 CDIs for Shares at an issue price of $0.20 each to raise $12,000,000.

IMPORTANT INFORMATION

This is an important document that should be read in its entirety. If you do not understand it you should consult your professional advisers without delay. The CDIs for Shares offered by this Prospectus should be considered highly speculative.

SUMATRA COPPER & GOLD plcABN 14 136 694 267

Corporate Adviser and Lead Manager

SUMATRA COPPER & GOLD plc

PROSPECTUS

www.sumatra‑copper‑gold.com

For

per

sona

l use

onl

y

4003

Des

ign

ed a

nd

Pro

du

ced

by

RD

A C

reat

ive

ww

w.r

da.

com

.au

Important Notice 1

Section 1Corporate Directory 3

Section 2Chairman’s Letter 4

Section 3Investment Summary 5

Section 4

Details of the Offer 10

Section 5Company and Project Overview 12

Section 6Board and Management 29

Section 7Independent Technical Report 31

Section 8Abridged Legal Report 44

Section 9Financial Information 57

Section 10Risk Factors 60

Section 11Additional Information 65

Section 12Directors’ Authorisation 78

Section 13Glossary 79

Contents

For

per

sona

l use

onl

y

1SUMATRA COPPER & GOLD plc PROSPECTUS

Important Notice

This Prospectus is dated 25 August 2009 and was lodged with the ASIC on that date. The ASIC and its officers take no responsibility for the contents of this Prospectus or the merits of the investment to which this Prospectus relates.

The expiry date of this Prospectus is at 5.00pm WST on that date which is 13 months after the date this Prospectus was lodged with the ASIC (Expiry Date). No CDIs for Shares may be issued on the basis of this Prospectus after the Expiry Date.

Application will be made to ASX within 7 days after the date of this Prospectus for Official Quotation of the CDIs for Shares the subject of this Prospectus.

The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe any of these restrictions. Failure to comply with these restrictions may violate securities’ laws. Applicants who are residents in countries other than Australia should consult their professional advisers as to whether any governmental or other consents are required or whether any other formalities need to be considered and followed.

This Prospectus does not constitute an invitation or offer in any place in which, or to any person to whom, it would not be lawful to make such an offer.

It is important that investors read this Prospectus in its entirety before deciding to invest in the Company. In particular, investors should consider the assumptions underlying any prospective financial information and the risk factors that could affect the financial performance of the Company. Investors should seek professional advice from their accountant, stockbroker, lawyer or other professional adviser where necessary before deciding to invest in the Company. The CDIs for Shares the subject of this Prospectus should be considered highly speculative.

Web Site ‑ Electronic Prospectus

A copy of this Prospectus can be downloaded from the website of the Company at www.sumatra‑copper‑gold.com/prospectus.html. Any person accessing the electronic version of this Prospectus for the purpose of making an investment in the Company must be an Australian resident and must only access this Prospectus from within Australia.

The Corporations Act prohibits any person passing onto another person an Application Form unless it is attached to a hard copy of this Prospectus or it accompanies the complete and unaltered version of this Prospectus.

Persons who have received a copy of the Prospectus in an electronic form may, during the period of the Offer, obtain a hard copy of this Prospectus free of charge by contacting the Company.

Exposure Period

This Prospectus will be circulated during the Exposure Period. The purpose of the Exposure Period is to enable this Prospectus to be examined by market participants prior to the raising of funds. Potential investors should be aware that this examination may result in the identification of deficiencies in this Prospectus and, in those circumstances; any application that has been received may need to be dealt with in accordance with Section 724 of the Corporations Act.

Applications for CDIs for Shares under this Prospectus will not be processed by the Company until after the expiry of the Exposure Period. No preference will be conferred on persons who lodge applications prior to the expiry of the Exposure Period.

Documents Incorporated by Reference

The information set out in Section 7 of this Prospectus (which contains a summary of the Independent Technical Report) is dealt with in more detail in a separate Independent Technical Report. The Independent Technical Report was lodged with ASIC on 25 August 2009 and is incorporated by reference into this Prospectus.

The information set out in Section 8 of this Prospectus (which contains a summary of the Legal Report) is dealt with in more detail in a separate Legal Report. The Legal Report was lodged with ASIC on 25 August 2009 and is incorporated by reference into this Prospectus.

The Company believes that the information in the Independent Technical Report and Legal Report is primarily of interest to professional advisors, institutional investors and to investors with similar specialist information needs. However, if you consider that the information in the Independent Technical Report and Legal Report might assist you in making your investment decision, you should obtain a copy of the Independent Technical Report and Legal Report and consult your broker or financial advisor. The Independent Technical Report and Legal Report can be obtained free of charge by contacting the Company on +61 2 9300 3377, or by email at info@sumatra‑copper‑gold.com.

For

per

sona

l use

onl

y

2 SUMATRA COPPER & GOLD plc PROSPECTUS

Important Notice Cont.

Mineralisation Estimates

The Independent Technical Report summarised in Section 7 has been prepared in accordance with the Code and Guidelines for Assessment and Valuation of Mineral Assets and Mineral Securities for Independent Expert Reports (VALMIN Code) which is binding upon members of the Australasian Institute of Mining and Metallurgy (AusIMM), the Australian Institute of Geoscientists (AIG) and the rules and guidelines relating to the independent experts reports set by the ASIC and ASX.

Privacy

If you complete an Application Form, you will be providing personal information to the Company. The Company collects, holds and will use that information to process your application, service your needs as a Shareholder and to facilitate distribution payments and corporate communications to you as a Shareholder.

The Company may disclose your personal information, for purposes related to your investment, to its agents or service providers, including the Broker to the Offer; the Share Registry; print service providers and mail houses. The Company may also disclose your personal information to persons inspecting the register, including bidders for your securities in the context of takeovers; and regulatory bodies, including the Australian Taxation Office.

You can access, correct and update the personal information that we hold about you. If you wish to do so, please contact the Share Registry at the relevant contact number set out in this Prospectus.

Collection, maintenance and disclosure of certain personal information is governed by legislation including the Privacy Act 1988 (Cth) (as amended), the Corporations Act and certain rules such as the ASTC Settlement Rules. You should note that if you do not provide the information required on the application for CDIs for Shares, the Company may not be able to accept or process your application.

For

per

sona

l use

onl

y


SE

CT

ION

ON

EDirectors

Warwick George Morris (Chairman)

Jocelyn Severyn de Warrenne Waller (Managing Director)

Alan Robert Flint (Director of Exploration)

Lord Daresbury (Non‑Executive Director)

Dr Michael Allan Price (Non‑Executive Director)

Company Secretary

Alison Barr

Registered Office

20‑22 Bedford Row

London WC1R 4JS

United Kingdom

Email: info@sumatra‑copper‑gold.com

Website: www.sumatra‑copper‑gold.com

Australian Office

Level 2, 66 Hunter Street

Sydney NSW 2000

Australia

Phone: +61 2 9300 3377

Fax: +61 2 9221 6333

Corporate Financial Adviser

Argonaut Capital Limited

Level 30 Allendale Square

77 St George’s Terrace

Perth WA 6000

Australia

Broker to the Issue

Argonaut Securities Pty Ltd

Level 30 Allendale Square

77 St George’s Terrace

Perth WA 6000

Australia

Independent Technical Experts

CSA Global Pty Ltd

Level 1, 47 Burswood Road

Burswood WA 6100

Australia

Share Registry

Computershare Investor Services Pty Limited

Level 19, 307 Queen Street

Brisbane QLD 4000

Australia

Phone: 1300 552 270 (within Australia)

Phone: +61 3 9415 4000 (outside Australia)

Lawyers

Minter Ellison (as to Australian law)

Aurora Place, 88 Phillip Street

Sydney NSW 2000

Australia

Soemadipradja & Taher (as to Indonesian law)

Wisma GKBI, Level 9

Jl. Jendral Sudirman No.28

Jakarta 10210

Indonesia

Corporate Directory

For

per

sona

l use

onl

y


SE

CT

ION

TW

O

25 August 2009

Dear Investor

On behalf of the Directors of Sumatra Copper & Gold plc (Sumatra or the Company), I am delighted to offer you the opportunity to become a Shareholder in the Company.

The Company was incorporated in 2006 with the specific objective of compiling a mining exploration rights package on the Indonesian island of Sumatra where historically there has been mining activity, particularly for gold and silver.

The Company holds an economic interest through a Co‑operation Agreement with its Indonesian Partners, in a portfolio of survey and exploration tenements and apparent rights to be granted exploration licences covering an area of approximately 6,000 square kilometres on the island of Sumatra in Indonesia. The directors consider that potential exists for the discovery and future development of economic mineral deposits in this area considering:

historically, there has been mining activity in the area of the projects, including production of 3.0 million ounces •of gold and 25.0 million ounces of silver; and

the projects have a global mineral resource inventory totalling approximately 2.0 million ounces of gold and •22.3 million ounces of silver (as detailed in Section 7 of this Prospectus); and

the comments highlighted in the Independent Technical Report that forms part of this Prospectus. •

The Company is seeking to issue 60,000,000 CDIs for Shares at an issue price of $0.20 each to raise $12,000,000 to provide funds to continue its survey and exploration program in relation to its mining authorisations and projects over the next 2 years as set out in Section 5.7 of this Prospectus.

This Offer presents investors with an opportunity to become part of a Sumatra‑focused exploration company that is well positioned to capitalise on the internationalisation of the Indonesian resource sector.

Before making any decision on this investment, I recommend that you read this Prospectus in its entirety and seek professional advice as appropriate. The risks associated with an investment in the Company are summarised and set out in more detail in Sections 3.9 and 10 of this Prospectus respectively.

On behalf of the Directors, I commend this opportunity to you and look forward to welcoming you as a shareholder.

Yours sincerely,

Warwick G. Morris Chairman

Chairman’s Letter

For

per

sona

l use

onl

y


SE

CT

ION

TH

RE

E

Investment Summary

This Section is not intended to provide full information for investors intending to apply for CDIs for Shares offered pursuant to this Prospectus. This Prospectus should be read and considered in its entirety.

3.1 Introduction to the Company

The Company is a minerals exploration company with an initial economic interest of up to 92.5%1 in granted survey and exploration licences and apparent rights to be granted exploration licences that extend over 6,000 km2 in the central part of Sumatra, Indonesia.

The Company holds its interest in the exploration licences and apparent rights to be granted exploration licences and conducts its activities pursuant and subject to a Co‑operation Agreement with its Indonesian Partners. The Partners comprise Mr Adi Sjoekri, a western‑educated professional geologist who previously worked with CSR/Billiton and then Newmont Mining Corporation in both Indonesia and the USA, and two companies controlled by him.

1 The New Mining Law contains a provision which states that 5 years after commercial production, foreign holders of interests in an Indonesian mining licence holding company are required to divest a percentage of their interest. Regulations setting out the percentage of required divestment have not yet been passed. However, current indications are that, commencing on the 5th year after commercial production, foreign interests must be reduced over a 4 year period so that the foreign interests in the relevant Indonesian mining licence holding company can be no greater than 80%. To date, such regulation has not been issued and could specify a different percentage to be divested and/or a different time period for completion of the divestment process.

3.2 Management

The Board of Directors comprise members with a combination of technical, financial, commercial and international experience in mining. In addition the Company and its Indonesian Partners have assembled a capable and qualified management team comprising some expatriates and a core of Indonesian professionals.

3.3 The Projects

The survey and exploration licence areas and the areas over which rights to obtain exploration licences appear to be held, within which all the Projects are located, include three historic epithermal gold‑silver mines which, prior to mining, each hosted more than 1.0 million ounces of gold. Exploration by the Company over the past 3 years has located gold and silver mineralisation within and adjacent to these former mines.

The gold‑silver projects are located in a district in central Sumatra with a substantial known mineral endowment and from which more than 3.0 million ounces of gold and 25.0 million ounces of silver are reported to have been produced. In total, as detailed in Section 5 of this Prospectus, a global JORC compliant mineral resource estimate statement reporting approximately 2.0 million ounces of gold and 22.3 million ounces of silver has been estimated within the Project areas (‘JORC compliant’ refers to the Australasian Code for the reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code 2004 Edition)).

Summary details of the Projects are described below. A full description of the Projects is contained in the Independent Technical Report in Section 7 of this Prospectus and a summary of the Company’s legal interest in each of the Projects is set out in the Abridged Legal Report by the Indonesian law firm of Soemadipradja & Taher in Section 8 of this Prospectus.

(a) Tembang

A previous open pit mine that operated from 1997 to •2000, its closure mainly attributable to low gold prices.

Global JORC compliant Mineral Resource estimate •statement, reporting approximately 53.7 million tonnes at 1.0 g/t and 11.5 g/t silver for a total of 1.64 million ounces of gold and 19.8 million ounces of silver, including a higher grade zone of vein material of 12.0 million tonnes at 1.9 g/t gold and 28.6 g/t silver, have been estimated.

Up to 6,500 metres of diamond and RC drilling •is planned at Tembang to test down‑dip and along‑strike extensions of higher grade epithermal gold‑silver mineralisation.

(b) Sontang

A virgin “manto” style discovery by NPM with the •assistance of the Company which has been subject to minimal exploration to date.

Rock chip sampling results up to 24.5 g/t gold •1,000.0 g/t silver, 12.2% lead and 30.8% zinc.

Weighted average from 54.8 metres of sawn rock •channel samples are 2.87 g/t gold, 118 g/t silver, 0.57% lead and 5.66% zinc.

Exploration licence already granted under New •Mining Law.

For

per

sona

l use

onl

y


SE

CT

ION

TH

RE

EInvestment Summary Cont.

Phase 1 work program proposes geophysical •and further geochemical surveys together with a minimum of 1,000 metres of diamond drilling which will start in late 2009.

Phase 2 program consists on a further 3,500 metres •of drilling subject to the results of Phase 1.

(c) Lebong

The Lebong Project includes two under‑explored •mining districts; Donok and Tambang Sawah.

The Donok underground mine previously operated •by the Dutch up to 1939 with recorded production of 1.34 million ounces of gold and 7.4 million ounces of silver at a grade of 12.8 g/t gold and 70.5 g/t silver where previous drilling has recorded intercepts up to 69.3 metres at 2.7 g/t gold.

Tambang Sawah underground mine is less •well understood than Donok, but drilling by the Company has recorded intercepts of up to 28.8 meters at 4.6 g/t gold.

No exploration work is planned whilst a dispute in •respect of overlapping claims remains unresolved.

(d) Tandai

Large intermediate sulfidation epithermal system •with molybdenum anomalies to the west.

Historical Dutch production totalled 1.4 million •ounces of gold and 15 million ounces of silver at a grade of 15.4 g/t gold and 167 g/t silver. Also mined by the Japanese for copper during WWII.

The Company and its Indonesian Partners’ survey •results have confirmed that gold mineralisation remains in the foot wall and hanging wall as indicated by the Company’s drill intercepts including 72.9 metres (22.0 metres true width) at 2.0 g/t gold adjacent to old Dutch stopes.

Multi million ounce target potential exists at the •Tandai project.

Initial work program will involve additional historical •data acquisition from archives in The Hague and Indonesia and conducting further geochemical surveys to define future drilling targets.

3.4 Exploration Focus

The Company aims to focus its exploration on epithermal gold‑silver systems and copper‑gold porphyry‑related mineral systems within the Projects based on technical analogies with the Philippines, where such systems occur within or adjacent to the gold‑silver mining camps.

Exploration for copper‑gold porphyry‑related mineral systems in Sumatra has historically been limited; however evidence of such mineralised systems has been identified at the Sontang Project.

3.5 Sovereign Risk

Indonesia is a developing country subject to an emerging legal and political system compared with the system in place in Australia. However, the Directors consider it encouraging that this year a New Mining Law has been promulgated. The effect of this legislation is to replace all existing forms of mineral authorisations and contracts of work with a new licensing system. Significantly, for the first time, foreign entities will be able to establish an Indonesian mining company to hold a direct interest in a mineral licence and can also have a direct investment in such Indonesian companies. Although the implementing regulations to cover the processes for transition from the old system to the new have not yet been promulgated, certain existing mineral rights applications have been “grandfathered” under Article 172 of the New Mining Law. Future new mineral licence grants that have not been “grandfathered” under Article 172 of the New Mining Law will be subject to an auction procedure.

The Full Legal Report by the Indonesian law firm of Soemadipradja & Taher, an abridged version of which is set out in Section 8, gives a summary of the Company’s and its Indonesian Partners’ rights in relation to the various mining authorisations held and/or applied for by them and also summarises various aspects of the mining regime under the New Mining Law.

3.6 Use of Funds

The proposed exploration programs may be subject to change and will be contingent on circumstances, results and other opportunities. The following tables illustrate the proposed application over a two year period of the funds to be raised by the Offer.

For

per

sona

l use

onl

y


SE

CT

ION

TH

RE

E

Investment Summary Cont.

On 14 August 2009, Macquarie agreed to make a short term facility for up to US$250,000 available to the Company. As at the date of this Prospectus, the Company has not drawn down any amounts under this facility.

Further information in relation to these facilities is set out in Section 11.7 of this Prospectus.

3.8 Working Capital

On completion of the Offer, the Company will have sufficient working capital to carry out the objectives stated in this Prospectus even if only the minimum subscription amount is raised. The above tables are the current intentions of the Company as at the date of lodgement this Prospectus. Intervening events (including the success or failure of exploration programs) and changing circumstances have the potential to alter the way in which the funds will be applied. The Board reserves the right to change the application of funds accordingly.

3.9 Key Investment Risks

Any investment in CDIs for Shares or other securities in the Company should be considered speculative because of the nature of the business activities of the Company and its Indonesian Partners and the stage of development of the Projects. Many of the risk factors associated with the Company’s and its Indonesian Partners’ business and its involvement in the exploration and minerals industry in Indonesia are largely beyond the control of the Company and its Directors.

(a) New Legal Regime

A new legal regime governing all aspects of exploration and mining in Indonesia, including licensing, came into effect on 12 January 2009. As at the date of this Prospectus, the Indonesian Government has not yet published implementing regulations on the change from the authorisation/licensing system under the old mining law to the authorisation/licensing system under the New Mining Law regime.

While the Indonesian mining regulatory system is currently in a state of flux, there is no guarantee that the various authorisations and rights to obtain new authorisations constituting the Projects will be able to move from the old to the new licensing regime. The Company and its Indonesian Partners are working diligently to transition the current authorisations and rights to obtain new authorisations into the New Mining Law. In the event that any disruption occurs in transitioning any authorisation, the Company will cease expenditure on that authorisation until the matter is resolved.

If the full subscription of $12,000,000 is raised from the Offer, the Company intends to apply funds raised from the Offer as follows:

Year 1 ($000)

Year 2 ($000)

Total ($000)

Exploration General 1,984 1,581 3,565

Exploration Drilling 1,248 1,100 2,348

Administration 501 376 877

Retire Macquarie Facilities 3,868 ‑ 3,868

Expenses of Issue 1,173 ‑ 1,173

General Working Capital 84 85 169

Total 8,858 3,142 12,000

If the minimum subscription of $10,000,000 is raised from the Offer, the Company intends to apply funds raised from the Offer as follows:

Year 1 ($000)

Year 2 ($000)

Total ($000)

Exploration General 903 764 1,667

Exploration Drilling 1,248 1,100 2,348

Administration 501 376 877

Retire Macquarie Facilities 3,868 ‑ 3,868

Expenses of Issue 1,071 ‑ 1,071

General Working Capital 84 85 169

Total 7,675 2,325 10,000

It is noted that up to $3,868,000 of the funds raised will be used to retire facilities provided by Macquarie.

3.7 Macquarie Facilities

On 24 September 2007, the Company entered into a bridge to equity facility agreement with Macquarie which is secured by way of a fixed and floating charge over all the assets of the Company. The Facility may be drawn up to a maximum of US$3,000,000 and is currently fully drawn (being approximately $3,570,000).

The Company must repay all amounts outstanding under this facility on the earlier of:

(a) 30 days after the Company receives any proceeds from the Offer; and

(b) 30 September 2009.

For

per

sona

l use

onl

y


SE

CT

ION

TH

RE

EInvestment Summary Cont.

While the Company and its Indonesian Partners have diligently investigated the authorisations and their rights to obtain authorisations in relation to the Projects and, to the best of the Company’s knowledge, the terms and conditions of the authorisations and the conditions to obtain new authorisations in respect of all of the Projects have been complied with, this should not be construed as a guarantee that the authorisations will not be challenged or impugned by third parties.

(b) Disputed Claim

There is an ongoing legal dispute involving a KP mining licence that was granted to a third party in an area overlapping with the Bengkulu SIPP area covering the Lebong project site. Although the Company believe that the competing KP mining licence in dispute was not validly issued, the process of resolving this matter may take considerable time and cost and may ultimately need to be decided by the Indonesian Supreme Court. There is no guarantee that this will result in a satisfactory resolution for the Company and its Indonesian Partners and no funds raised under the Offer will be expended on exploration in this area until the matter has been resolved.

(c) Reliance on Co‑operation Agreement and Indonesian Partners

The Company is reliant on its Indonesian Partners (particularly Adi Sjoekri) and the Co‑operation Agreement to secure and maintain its interest in the Projects, particularly in the early stages of each Project. The main obligations and duties under the Cooperation Agreement between the Company and the Indonesian Partners are to co‑operate with each other in the achievement of certain goals, which would likely be

open to a degree of uncertainty and interpretation by the Indonesian Courts. As such, there may be difficulties enforcing the provisions of the Co‑operation Agreement should it ever be challenged.

Regardless of the legal enforceability of any agreements with its Indonesian Partners, maintenance of a genuinely co‑operative and constructive relationship between the Company and its Indonesian Partners will be crucial to the security of the Company’s interests. An adverse change in this relationship could have significant adverse consequences on the Company’s interests.

Investors are encouraged to read Section 10 which sets out what the Company sees as the material risk factors that may have an adverse effect on the Company and its Indonesian Partners’ business.

3.10 Indicative Timetable

Indicative Timetable Date

Lodgement of Prospectus with the ASIC 25 August 2009

Opening Date 2 September 2009

Closing Date 5.00pm WST on 16 September 2009

Despatch of Holding Statements 25 September 2009

Expected date for listing on ASX 30 September 2009

The above dates are indicative only and may change without notice. The Company reserves the right to extend the Closing Date or close the Offer early without notice.

For

per

sona

l use

onl

y


SE

CT

ION

TH

RE

E

Investment Summary Cont.

3.11 Existing Capital Structure

Since incorporation, the Company has raised a total of £7,659,298 (net of all fees) from private investors. The funds have been used to acquire the interests in tenements and to undertake exploration activities on the project areas.

The existing capital structure of the Company at the date of this Prospectus is summarised below:

Securities Number

Shares on issue at date of Prospectus 65,448,252

Other Securities

Employee Share Plan Options on issue at date of Prospectus1 10,960,000

Macquarie vested Options on issue at date of Prospectus2 6,250,000

Macquarie Warrants on issue at date of Prospectus3 50,000

Mirabaud Warrants on issue at date of Prospectus4 1,483,750

Existing Major Shareholders

Macquarie Bank Limited 19.5%

Alan Robert Flint 10.5%

St Peter Port Capital 8.5%

Nortrust Nominees Limited (a/c JPT01) 6.6%

Jocelyn Severyn de Warrene Waller 6.5%

AM2 (Bermuda) Limited 6.1%

Notes: 1 Exercisable at A$0.20. 2 Exercisable at A$0.20. 3 Exercisable at £0.15. 4 Exercisable at £0.18.

Full terms and conditions of the Options and Warrants are set out in Sections 11.5, 11.6 and 11.7 of this Prospectus.

3.12 Pro‑forma Capital Structure

The pro‑forma capital structure of the Company following completion of the Offer is summarised below:

Full Subscription

Minimum Subscription

Shares Number Number

Shares on issue at date of Prospectus 65,448,252 65,448,252

Shares to be issued under the Offer 60,000,000 50,000,000

Shares to be issued on completion of the Offer1 2,038,450 2,038,450

Total 127,486,702 117,486,702

Other Securities

Employee Options on issue at date of Prospectus2 10,960,000 10,960,000

Macquarie vested Options on issue at date of Prospectus3 6,250,000 6,250,000

Macquarie Warrants on issue at date of Prospectus4 50,000 50,000

Mirabaud Warrants on issue at date of Prospectus5 1,483,750 1,483,750

Total 146,230,452 136,230,452

Notes: 1 538,450 shares to be issued to directors in lieu of unpaid

directors fees at 30 June 2009 and 1,500,000 shares to be issued to parties promoting the Offer.

2 Exercisable at A$0.20. 3 Exercisable at A$0.20. 4 Exercisable at £0.15. 5 Exercisable at £0.18.

Full terms and conditions of the Options and Warrants are set out in Sections 11.5, 11.6 and 11.7 of this Prospectus.F

or p

erso

nal u

se o

nly


SE

CT

ION

FO

UR

Details of the Offer

4.1 The Offer

Pursuant to the Offer, the Company invites applications for up to 60,000,000 CDIs for Shares at an issue price of $0.20 each to raise $12,000,000.

The Shares underlying the CDIs for Shares offered under this Prospectus will rank equally with the existing Shares on issue.

Investors should note that Shares offered under this Prospectus will trade on the ASX by way of CHESS Depository Interests (CDIs or CDIs for Shares).

See Sections 11.2 and 11.3 for a further explanation of CDIs.

The Company reserves the right to accept applications to subscribe for CDIs for Shares at the same price as the Offer that it receives other than pursuant to the Offer under this Prospectus.

4.2 Minimum Subscription

The minimum subscription to be raised pursuant to the Offer is $10,000,000.

If the minimum subscription has not been raised within 4 months after the date of this Prospectus, the Company will either repay all application monies in full or will issue a supplementary or replacement prospectus and allow applicants one month to withdraw their applications and be repaid their application monies. No interest will be paid on these monies.

4.3 Oversubscriptions

No oversubscriptions will be accepted by the Company.

4.4 Applications

Applications for CDIs for Shares under the Offer must be made using the Application Form.

Payment for the CDIs for Shares must be made in full at the issue price of $0.20 per Share. Applications for CDIs for Shares must be for a minimum of 10,000 CDIs for Shares and thereafter in multiples of 1,000 CDIs for Shares. Completed Application Forms and accompanying cheques must be mailed to:

Argonaut Securities Pty Limited GPO Box 2553 PERTH WA 6001

or delivered to:

Argonaut Securities Pty Limited Level 30, Allendale Square 77 St Georges Terrace PERTH WA 6001

Cheques should be made payable to “Sumatra Copper & Gold plc ‑ Share Offer Account” and crossed “Not Negotiable”. Completed Application Forms must reach one of the above addresses by no later than the Closing Date.

The Company reserves the right to close the Offer early.

4.5 Allotment

Subject to ASX granting approval for the Company to be admitted to the Official List, allotment of CDIs for Shares offered by this Prospectus will take place as soon as practicable after the Closing Date. Prior to allotment, all application monies shall be held by the Company on trust. The Company, irrespective of whether the allotment of CDIs for Shares takes place, will retain any interest earned on the application monies.

The Directors reserve the right to allot CDIs for Shares in full for any application or to allot any lesser number or to decline any application. Where the number of CDIs for Shares allotted is less than the number applied for, or where no allotment is made, the surplus application monies will be returned by cheque to the applicant within 7 days of the allotment date.

4.6 ASX Listing

The Company will apply to ASX within 7 days after the date of this Prospectus for admission to the Official List and for Official Quotation of the CDIs for Shares offered under this Prospectus. If ASX does not grant permission for Official Quotation of the CDIs for Shares within 3 months after the date of this Prospectus, or such longer period as is permitted by the Corporations Act, none of the CDIs for Shares offered by this Prospectus will be allotted or issued. In that circumstance, all applications will be dealt with in accordance with the Corporations Act.

4.7 Applicants Outside Australia

This Prospectus does not, and is not intended to, constitute an offer in any place or jurisdiction, or to any person to whom, it would not be lawful to make such an offer or to issue this Prospectus. The distribution of this Prospectus in jurisdictions outside Australia may be restricted by law and persons who come into possession of this Prospectus should seek advice on and observe any such restrictions. Any failure to comply with such restrictions may constitute a violation of applicable securities laws. No action has been taken to register or qualify the CDIs for Shares or otherwise permit a public offering of the CDIs for Shares the subject of this Prospectus in any jurisdiction outside Australia.

It is the responsibility of applicants outside Australia to obtain all necessary approvals for the allotment

For

per

sona

l use

onl

y


SE

CT

ION

FO

UR

Details of the Offer Cont.

and issue of the CDIs for Shares pursuant to this Prospectus. The return of a completed Application Form will be taken by the Company to constitute a representation and warranty by the applicant that all relevant approvals have been obtained.

The Offer pursuant to an electronic version of the Prospectus is only available to Australian residents accessing an electronic version of this Prospectus within Australia.

4.8 Not Underwritten

The Offer is not underwritten.

4.9 Commissions Payable

The Company will pay the Broker, Argonaut Securities Pty Limited (AFSL 274 099) a commission of 5% (exclusive of goods and services tax) of the total amount raised under the Offer. Out of the commission Argonaut Securities Pty Limited may pay other licensed securities dealers in respect of any valid applications lodged and accepted by the Company bearing the stamp of that licensed securities dealer or Australian financial services licensee.

4.10 CHESS

The Company will apply to participate in the Clearing House Electronic Subregister System (CHESS). CHESS is operated by ASX Settlement and Transfer Corporation Pty Ltd (ASTC), a wholly owned subsidiary of ASX, in accordance with the Listing Rules and the ASTC Settlement Rules.

The jurisdiction in which the Company is incorporated does not recognise the CHESS system of holding shares or electronic transfer of legal title. To facilitate trading on ASX, the Company will have uncertificated CDIs issued over its Shares as an alternative to holding UK registered share certificates. Investors cannot trade Shares on ASX unless they are held in the form of CDIs. CDIs are frequently used for trading foreign company shares on ASX, and trade in a similar manner to ordinary shares. Each CDI represents one underlying share. See Sections 11.2 and 11.3 for an explanation of CDIs.

Under CHESS, the Company will not issue certificates to investors. Instead, holders of CDIs for Shares will receive a holding statement showing the number of underlying Shares issued.

The Company operates a certified UK register of Shares. On admission to CHESS, the Company will also operate an electronic uncertified issuer‑sponsored sub‑register of CDIs and an electronic uncertified CHESS sub‑register of CDIs in Australia. The two sub‑registers together will make up the Company’s register of CDI holders. The certified register is the

register of legal title and the two uncertified CDI sub‑registers will make up the register of beneficial title of the Shares underlying the CDIs.

4.11 Risk Factors

Prospective investors in the Company should be aware that subscribing for CDIs for Shares the subject of this Prospectus involves a number of risks. These risks are set out in Section 10 of this Prospectus and investors are urged to consider those risks carefully (and, if necessary, consult their professional adviser) before deciding whether to invest in the Company.

The risk factors set out in Section 10 of this Prospectus, and other general risks applicable to all investments in listed securities not specifically referred to, may in the future affect the value of the CDIs for Shares. Accordingly, an investment in the Company should be considered highly speculative.

4.12 Queries

This Prospectus provides information for investors to decide if they wish to invest in the Company and should be read in its entirety. If you have any questions about investing in the Company, please contact your stockbroker, financial planner, accountant, lawyer or independent financial adviser.

4.13 Restricted Securities

Subject to the Company being admitted to the Official List, CDIs for Shares issued prior to the Offer to promoters, vendors, seed capital investors and others are likely to be classified by ASX as restricted securities and may be required to be held in escrow for a period of time determined by the ASX.

4.14 Withdrawal

The Directors may at any time decide to withdraw this Prospectus or the Offer, in which case the Company will return all Application Monies without interest within 28 days of giving notice of withdrawal.

4.15 Dividends

At the time of issue of this Prospectus no dividend has been forecast by the Board and none is anticipated for the foreseeable future.

The Directors consider that at this stage of the Company’s development they are unable to provide potential investors with reliable revenue, profit or cash flow forecasts. The Directors will assess the ability to pay dividends, if and when deemed appropriate to the Company’s circumstances, as the Company further develops.

For

per

sona

l use

onl

y


Company and Project Overview

5.1 Background

The Company was incorporated as Centredune Limited in England and Wales on 11 April 2006. The Company having changed its name by special resolution was re‑registered as Sumatra Copper & Gold Limited on 26 May 2006. The Company converted to a public limited company, limited by shares and was re‑registered as a public limited company on 3 July 2008 and changed its name to Sumatra Copper & Gold plc.

The Company’s strategy is to establish a successful Indonesian focused exploration Company. The Company and its Indonesian Partner have interests in seven mineral authorisations and an additional large area in respect of which an application and “agreement in principle” has been conferred together totalling 6,050 km2. The authorisations include three gold‑silver projects that were previously in production and the areas adjacent to these old mines.

The three gold‑silver projects comprise Tembang, Tandai and Lebong, with the latter consisting of two geographically adjacent former Dutch mines, Donok and Tambang Sawah. The fourth project, Sontang is a

recent polymetallic (gold, silver, lead, zinc and copper) discovery with no prior production history. Rights to the Sontang Project are based on a mining business permit (Exploration IUP) granted under the New Mining Law.

It is the Company’s intention, together with its Indonesian Partners, to evaluate, explore and potentially develop the majority of the Projects, as well as evaluate and acquire additional prospective areas within Indonesia.

5.2 Why Indonesia?

Indonesia is an archipelago of more than 17,000 islands straddling the equator in south‑east Asia, with Sumatra located at the north western end. The country has 33 provinces sub‑divided into regencies and cities, collectively the key administrative units responsible for providing government services. Indonesia is a developing nation with an estimated population of 238 million people, who are predominantly Muslim with an estimated GDP per capita of US$3,400. The country is a republic with a democratically elected President who is both chief of state and head of government.

Figure 1: Location map showing the Company’s Projects, Indonesian copper and gold mines

SE

CT

ION

FIV

EF

or p

erso

nal u

se o

nly


Figure 2: Location of the Sontang, Tembang, Tandai and Lebong Projects

Company and Project Overview Cont.

In 2008, Indonesia was the world’s seventh largest gold producer, with production of some 116 tonnes. Minerals and related products are some of Indonesia’s most important sources of foreign currency, contributing 19% of the country’s exports.

The country is home to one of the world’s largest gold mines, Freeport‑McMoRan Copper & Gold Inc.’s Grasberg operation in Irian Jaya (Figure 1) where gold production is a by‑product of copper mining. Other mining operations include PT Newmont Nusa Tenggara’s Batu Hijau copper‑gold mine in West Sumbawa and Newcrest Mining Limited’s Gosowong gold mine on Halmahera Island.

In 2006, when the Company started investing in Indonesia, the Directors considered that the level of foreign activity in the exploration sector was relatively low, which provided a good opportunity for the Company, in co‑operation with its Indonesian Partner, to obtain mineral rights over extensive prospective areas.

To date, the activities of the Company and its Indonesian Partners have been focused on the island of Sumatra.

Sumatra is one of the largest islands in the Indonesian archipelago, and has a long history of gold mining dating back to the time of Indian trading activity approximately 1,000 years ago. While under Dutch administration the country’s largest gold mines were underground operations on the high‑grade Donok and Tandai epithermal vein deposits in Sumatra (Figures 2, 3 and 4). Both of these mines lie within a SIPP granted to the Company and its Indonesian Partner. Most precious metal production from the area was by Dutch companies, dating from the early 1900s until the Japanese occupation of Sumatra in 1942, with approximately 3.0 million ounces of gold and 25.0 million ounces of silver reported to have been produced. Mining and exploration was interrupted by World War II and the subsequent turbulent years accompanying and postdating Indonesia’s independence struggle.

SE

CT

ION

FIV

E

For

per

sona

l use

onl

y



5.3 Overview of Old and New Mining Regulatory Licensing Framework in Indonesia

The old mining regime was established by Law No.11 of 1967 on the Basic Provisions on Mining (the Old Mining Law). Even though a new legal regime governing all aspects of exploration and mining in Indonesia, including licensing, came into effect on 12 January 2009 (the New Mining Law), the Old Mining Law remains of importance. This is because the Indonesian Government has not yet published implementing regulations on the change from the authorisation/licensing system under the Old Mining Law to the authorisation/licensing system under the New Mining Law. Consequently, mining activities licences and permits granted under the Old Mining Law have continued to be recognised.

A summary comparison of the Old Mining Law regime and the New Mining Law regime as well as an analysis of the authorisations underlying the Projects is set out in S&T’s Abridged Legal Report in Section 8 of this Prospectus.

In their Abridged Legal Report, S&T note that although the mining regulatory system is currently in a state of flux, “grandfathering” provisions referred to in the New Mining Law and recently issued official circulars give reasonable comfort that various authorisations constituting the Projects in which the Company has an interest, will be able to move from the old to the new licensing regime and that the holders of the various authorisations have done all that they are reasonably able to do in the absence of specific regulations in order to comply with the New Mining Law.

5.4 Nature of Acquisitions and Asset Holding Structure

Through the Co‑operation Agreement the Company and its Indonesian Partners have agreed to co‑operate in identifying and developing suitable exploration and mining projects in Indonesia and establishing appropriate ‘mining investment vehicles’ to hold relevant mining licences. The Co‑operation Agreement contemplates that the Company will hold up to a 92.5% interest in each ‘mining investment vehicle’. The remaining interest of 7.5% in the projects is held by the Indonesian Partners.

As a consequence of the New Mining Law, non‑Indonesian parties can now directly hold equity in an Indonesian limited liability mining company (PMA) that is able to hold a mining exploration or exploitation licence (IUP). The Company will initially hold a direct interest of up to 92.5% of the equity in such PMA mining companies. The maximum interest of the Company in

such PMA mining companies will eventually be subject to the divestment provisions under the New Mining Law, which will take effect as of the 5th year after commercial production has commenced. Although the regulations to specify the amount of divestment have not yet been issued, there have been indications in the media that the interest of a foreign party in such mining PMA mining company will need to be reduced to a maximum of 80% over a period of 4 years after the 5th year of the commencement of commercial production.

As the New Mining Law embraces a one year transition period (expiring 12 January 2010), the Company and its Indonesian Partners are committed to changing the current arrangements under the Co‑operation Agreement (described below) in order to reflect the ability of the Company to have direct equity holdings in such PMA mining companies (and other matters). The Company and its Indonesian Partners have agreed to make such changes to the Co‑operation Agreement as soon as practicable after the regulations to the New Mining Law have been passed.

For those Projects where the relevant mining authorisation had to be held by the Indonesian Partners under the Old Mining Law (e.g. the KP holdings in the Tembang Project), the Co‑operation Agreement currently contemplates that the Company will establish a wholly owned mining services company that will enter into a contractual relationship with the relevant Indonesian Partner to develop the relevant mine and have 92.5% of the economic benefit of the mine, with the Indonesian partners having a 7.5% economic benefit.

The above arrangements are contemplated to be replaced upon the amendment of the Co‑operation Agreement so that a mining services company will no longer be required and the Company will be able to have an initial direct interest of 92.5% in a PMA mining company that will hold the relevant IUP under the new licencing regime.

For those projects where a mining licence may be held jointly by an Indonesian partner and the Company (e.g. Lebong and Tandai), the Company and the Indonesian partners will jointly establish a PMA mining company in which they will have initial interests of 92.5% and 7.5% respectively.

In response to certain letters dated 6 July 2009 issued by the Director General of Minerals Coal and Geothermal, the Indonesian Investment Coordinating Board (BKPM) issued formal approvals on 6 August 2009 for the establishment of 4 PMA mining companies by the Company and its Indonesian Partner (NPM) under the New Mining Law, which are upon establishment, intended to be used as the relevant vehicles to hold IUPs.

SE

CT

ION

FIV

EF

or p

erso

nal u

se o

nly



The Company is required to provide funding to its Indonesian Partners in relation to the Indonesian Partners’ share of total project expenditures (such total amounts as determined by the Company in its sole discretion) by way of a loan to the relevant Indonesian Partner but is entitled to be repaid those loans (plus interest) from 90% of the profits of any future mining operations at the projects that would otherwise be attributable to the Indonesian Partners.

The above information on the Company’s and its Indonesian Partners’ corporate and asset holding structure should be read in conjunction with S&T’s Abridged Legal Report in Section 8 of this Prospectus.

5.5 Overview of Projects

A summary of the Projects is provided below. This should be read in conjunction with the more comprehensive details on the Project’s technical aspects and the Abridged Legal Report as set out in the Independent Technical Report, the executive summary of which is set out in Section 7 and the Abridged Legal Report, an abridged version of which is set out in Section 8 of this Prospectus respectively.

The Company together with its Indonesian Partners have interests in authorisations over a range of areas that include JORC compliant mineral resource estimates at Tembang and Lebong, a multi‑million ounce target at Tandai, to a polymetallic discovery at Sontang. The environs of old mines represent an opportunity for exploration with an enhanced chance of success.

This is reflected in the magnitude of the Company’s resources and exploration targets which are either within or immediately adjacent to the old mine workings. The exception is Sontang, which is a new discovery by the Indonesian Partners, in co‑operation with the Company and therefore has not previously been mined. The available data suggests potential for the development of open pit bulk mining at Tembang, Lebong and Tandai. Underground potential also exists at Lebong and Tandai.

The Company and its Indonesian Partners have been active since 2006, acquiring rights to mining areas and conducting surface and underground mapping, trenching, geochemical and geophysical surveys, and substantial drilling programs including twinning of

historical holes, resource infill and extension drilling. Some of this data was used in estimation of Mineral Resources and an Ore Reserve, estimated and reported using industry best practice using the guidelines JORC code (2004).

Based on historical data acquired by the Company and its Indonesian Partners, studies and drilling carried out by the Company and its Indonesian Partners, it is apparent that potential remains at each of the previously mined deposits. The Tembang Project and the Lebong Project are considered as advanced exploration and survey projects respectively, with good potential for re‑development after completion of the relevant feasibility studies. Of the resources tabulated below, Tembang was independently estimated by Snowden Mining Industry Consultants as part of a Pre‑Feasibility Study (PFS) that was concluded in May 2009.

Figure 3: Historical photos of Tandai gold plant and the hill of Lebong Baru mined by the Japanese for copper.

Dutch production totalled 1.4 million ounces of gold.

SE

CT

ION

FIV

E

For

per

sona

l use

onl

y



Summary of Mineral Resources estimates reported to JORC Code standards

Notes:

1 Rounding errors may occur. The net attributable to Sumatra amounts to 92.5% of the gross Mineral Resource. The cut‑off grade for Tembang is 0.5g/t gold for the vein mineralisation and 0.35g/t gold for the halo mineralisation. The cut‑off grade for Tambang Sawah and Donok are 0.35g/t gold. The Tembang Mineral Resource was estimated by Mr Matthew Nimmo MAusIMM of Snowden Mining Industry Consultants (Mr David Stock MAusIMM who is a Geological Consultant to Sumatra provided the geological interpretation and QA/QC validation). The Donok and Tambang Sawah Mineral Resources were estimated by Mr David Stock. Both Mr Nimmo and Mr Stock are Competent Persons as defined by the Australasian Code for the reporting of Exploration Results, Mineral Resources and Ore Reserves (the JORC Code 2004 Edition) and consent to the inclusion in this report on the matters based on their information in the form and context in which they appear.

2 The net attributable to the Company is assumed to be 92.5% of the gross Mineral Resource. However, the New Mining Law contains a provision which states that 5 years after the commencement of commercial production, foreign holders of interests in an Indonesian mining licence holding company are required to divest a percentage of their interest. Regulations setting out the percentage of required divestment have not yet been passed. However, current indications are that, commencing on the 5th year after the commencement of commercial production, foreign interests must be reduced over a 4 year period so that the foreign interests in the relevant Indonesian mining licence holding company can be no greater than 80%. To date, such regulation has not been issued and could specify a different percentage to be divested and/or a different time period for completion of the divestment process.

SE

CT

ION

FIV

EF

or p

erso

nal u

se o

nly



The four projects’ exploration potential is summarised in each of the sections below. The magnitude of the targets at Tandai and Lebong reflects the interplay of proximity to old mines, and the historic high cut‑off grades resulting in considerable potential remaining in these geologic systems.

(a) Tembang Project

Tembang is an abandoned mine with a recent exploration history dating back to the 1980s. The Company and its Indonesian Partners hold various rights to an area of about 800 km2 over and around the old mine‑site, and these are host to known partially‑explored epithermal gold‑silver and copper‑gold porphyry systems and reflect extensions of the historically important goldfields of Bengkulu.

Tembang is a large low‑sulphidation epithermal deposit comprising gold‑silver bearing quartz sulphide veins hosted by Tertiary volcanics. Two vein styles (Figure 4) are present; a relatively wide and continuous vein set surrounded by irregular narrower veins that occur in both the footwall and hanging‑wall providing a “halo” of mineralisation peripheral to the main veins.

The historic mine commenced production under a previous operator in late 1997 and ceased production in March 2000 due to a declining gold price. The prior operator mined only the main veins and discarded the lower grade halo mineralisation.

The Company and its Indonesian Partners have acquired the existing comprehensive data‑sets which include airborne geophysics, 128,000 metres of RC and diamond drilling, soil geochemistry, topography and previous production records.

From the work conducted by the Company and its Indonesian Partners, the potential exploration targets are reasonably well understood and include more than 9.0 million cubic metres of dumps dominated by halo mineralisation mined and discarded by the last operator.

Tembang is the most advanced of all the Company’s Projects. Snowden Mining Industry Consultants (Snowden) have undertaken a Pre‑Feasibility Study and the executive summary of their report is appended to the Independent Technical Report (ITR).

The PFS level of accuracy is +/‑ 20% and investigated the potential to upgrade the halo mineralisation by simple beneficiation as part of a future mining operation. Approximately half of Tembang’s resource is represented by halo material and the ability to economically recover gold from this material encouraged the Company to identify whether there are economies of scale related to higher processing rates.

The PFS revealed that the beneficiation of the halo mineralisation is conceptually feasible and offers economies of scale from larger processing rates. Throughputs of up to 2.5 Mtpa were considered which forecast an average 120,000 ounces of gold would be produced annually for approximately eight years.

Figure 4: Snowden resource model showing distribution of main veins, and peripheral halo

SE

CT

ION

FIV

E

For

per

sona

l use

onl

y



Snowden concluded:

“The Tembang Project has the potential to develop as an operational mine if the gold and silver prices are at current market prices and metallurgical recoveries are confirmed as favourable. Increasing the halo and vein mineralisation and to Indicated Mineral Resources and vein mineralisation to Measured Mineral Resource will produce larger resources for economic evaluation. Additional drilling is recommended to achieve this.” and “… the project is one in which there are multiple scenarios and the resultant flexibility will likely result in the identification of further upside.”

The Company and its Indonesian Partners plan to increase the resource base by focusing on exploration targets where higher grades are anticipated at relatively shallow depths. A 3D Datamine model of geology and mineralisation will be constructed to orient geological mapping and geochemical sampling of targets adjacent to the planned pits. The Company and its Indonesian Partners plan to drill approximately 5,000 metres of combined diamond and RC drilling to test along‑strike and down‑dip extensions to the current mineral resource in expectation of enlarging the conceptual pits outlined in the PFS. Drilling will focus on the areas

of Belinau, Bujang and Buluh. Up to 1,500 metres of diamond drilling has been budgeted for the testing of additional outlying targets.

Drilling will commence in 2009, and the results will be integrated with those developed under the PFS to ensure any future operation is optimised at the most appropriate rate of production.

(b) Sontang Project

Rights of the Company’s Indonesian Partner (NPM) to hold mining authorisations over 6,050 km2 were acquired not only for the existing epithermal gold/silver potential but also for the potential to find porphyry systems (analogous to the Philippines) that historical exploration had overlooked due to the focus on gold‑silver. Sontang is held within an Exploration IUP, which is valid for six years, and comprises one of the first exploration licences to be granted under the New Minerals Law.

Sontang comprises the virgin discovery of a poly‑metallic manto (Figures 5 and 6). Hydrothermal alteration and mineralisation is dispersed over an area extending approximately 1.5km along strike (Figure 6).

Figure 5: Sontang, initial gold and silver results

SE

CT

ION

FIV

EF

or p

erso

nal u

se o

nly



Elevated values of gold, silver and base metals (zinc, lead and copper) were frequently encountered during rock chip sampling with maximum values of 24.5 g/t gold, 1,000 g/t silver, 12.2% lead and 30.8% zinc. Several styles of mineralisation and alteration have been identified with a zonation suggestive of a temperature gradient increasing north‑westwards where an intrusive source is interpreted (Figure 6).

The manto is hosted by a calcareous sequence which occurs throughout the mineralised areas. Most significant mineralisation identified so far comprises massive sulphides interpreted to represent “manto style” mineralisation.

Geological mapping indicates several receptive stratigraphic horizons to be mineralised with true thickness of up to 5 metres of massive sulphides. Fieldwork indicates the manto to be best‑developed at the south‑eastern end, and systematic detailed work has commenced in this East Sontang area.

Figure 6: Sontang interpretive geology and exploration target

The weighted‑average for metal content received from 54.8 meters of sawn rock‑channel samples is 2.87 g/t gold, 118 g/t silver, 0.57% lead and 5.66% zinc.

Phase 1 of the Company’s proposed work program will include the evaluation of the discovery by completing geochemical sampling of the surrounding drainages to define the extent of the system. Soil sampling will be conducted in the most anomalous drainages and geophysics will be applied selectively over the most geochemically anomalous areas to further define targets for a minimum 1,000 metre drilling program to commence late 2009. Subject to the results of Phase 1 providing sufficient information to efficiently site additional diamond drill‑holes and the proposed work program meeting relevant budgeting requirements, Phase 2 of the work program will commence. Phase 2 will include a further 3,500 metres of drilling and a ground time‑domain electromagnetic survey and down‑hole geophysics may also be applicable.

SE

CT

ION

FIV

E

For

per

sona

l use

onl

y



(c) Lebong Project

The Lebong Project, which includes two under‑explored mines (Donok and Tembang Sawah), lies approximately sixty kilometres to the west of Tembang within a large Dutch mining district within the 2,500 km2 Bengkulu SIPP.

Figure 7: Donok model from Dutch data, showing distribution of historic grades

Together with its Indonesian Partners, the Company has conducted work on two of the former underground gold‑silver mines within the district, Donok which produced.1.34 million ounces of gold and 7.4 million ounces of silver at a grade of 12.8 g/t gold, 70.5 g/t silver and Tambang Sawah eight kilometres to the north. The Company’s objective is to identify and develop resources potentially amenable to open‑pit mining in the vicinity of the old mines.

SE

CT

ION

FIV

EF

or p

erso

nal u

se o

nly



The Donok prospect is a high‑grade low‑sulphidation gold‑silver epithermal system (Figure 8) hosted in both veins and breccias. The mineralisation is spatially‑related to a pre‑mineral intrusive (“dacite”) that influenced local stresses at the time of mineralisation.

The Dutch mined the deposit underground to a cut‑off grade of approximately 7 g/t gold. Mining was restricted to 300 metres of strike (Figure 9) where grade was highest, which ceased in about 1939. At cessation, level plans show average grades of 7.6 g/t gold still being recovered from Levels 11 and 12 (Figure 8). Several types of veining are present, but historical production was from a single wide structure in the hanging wall to the Donok intrusive. Mineralisation is thought to extend over 1.6 kilometres of strike and to locally continue to surface.

The property was partially drilled in the 1980s and 1990s and the results are detailed in the appended Independent Technical Report. That exploration included extensive geophysics, which identified a footwall structure parallel to the mined Donok vein.

At surface the new structure is obscured by a veneer of post‑mineral cover and remained undetected to the Dutch miners. Results of a single drill hole returned

Figure 8: Donok model from Dutch data, showing limited extent of historic mining

intercepts of 29.9 metres at 1.4 g/t gold, 5.1 g/t silver; 9.0 metres at 2.4 g/t gold, 15.1 g/t silver and 7.4 metres at 2.3 g/t gold, 1.1 g/t silver. This is a high‑priority target as the mineralisation has significant width, is at shallow depth, and favourably located adjacent to a dacite. The structure may be analogous to the high‑grade Donok vein (Figure 8) and has not yet been drilled.

4,108 metres of drilling in 25 holes in the vicinity of the Donok vein and its along‑strike extensions has already been completed. A mineral resource has been estimated that is open in all directions. The wide drill spacing plus uncertainty as to the extent of the Dutch stoping means the resource is classified as Inferred.

The Dutch mine data allowed the construction of a 3D geological model which the Company’s drilling to date has demonstrated to be accurate and reliable. The model identifies a second dacite body (Boenoet dacite) at depth which does not come to surface. A 1.3 kilometres long Dutch exploration drive on the penultimate level (number 11) intersected and investigated breccias proximal to this Boenoet dacite which are understood to be similar to mineralised breccias proximal to the Donok dacite (Figure 9). Assuming mineralisation style is similar, these breccias represent a substantial exploration target. S

EC

TIO

N F

IVE

For

per

sona

l use

onl

y



Figure 9: Donok exploration target in the mine’s lower levels at Donok and Boenoet

At Donok, Dutch data identifies two large breccia bodies adjacent to the dacites representing a +4 million ounce gold exploration target (Figure 9). As the breccias are at depth, the shallower footwall target, which may mirror the main Donok vein, will be evaluated first. The Tambang Sawah mineralisation is open in most directions with potential to extend the current resource along‑strike and down‑dip.

The Tambang Sawah prospect is an abandoned mine eight kilometres to the north of Donok. The mineralisation is also epithermal and of a low‑sulphidation nature but is less well‑understood than Donok.

At Tambang Sawah (Figure 10) the geology is complicated by structure related to the nearby Trans Sumatra Fault. The mineralisation comprises veins, which are commonly crustiform‑banded, hosted within broad zones of lower‑grade breccias.

Fourteen diamond holes totalling 1,361 metres have been drilled by the Company and intersections include 28.8 metres at 4.6 g/t gold close to surface.

SE

CT

ION

FIV

EF

or p

erso

nal u

se o

nly



Figure 10: Tambang Sawah cross section showing the distribution of mineralisation

The database for the Lebong Project is sufficiently comprehensive for there to be confidence in the exploration target potential for this old mining district. The data comprises drill results from prior explorers, airborne magnetics, soil and drainage geochemistry and the results of the extensive Controlled Source Audiomagnetotellurics survey. There are a number of other Dutch workings in addition to those referred to above, however the Company and its Indonesian Partners are focused on the most significant exploration targets currently known within and adjacent to the workings.

It should be noted there is an ongoing legal dispute involving a exploitation KP mining licence that was granted to a third party in an area overlapping with the Bengkulu SIPP area covering the Lebong project site. Although the Company and its Indonesian lawyers believe that the competing exploitation KP licence in dispute was not validly issued, the process of resolving this matter may take considerable time and cost and may ultimately need to be decided by the Indonesian Supreme Court. Brief details of the dispute are contained in the Abridged Legal Report presented in Section 8 of this Prospectus. Future exploration will be deferred until the dispute has been resolved.

SE

CT

ION

FIV

E

For

per

sona

l use

onl

y



(d) Tandai Project

Tandai, like Lebong, represents an under‑explored historical mining district. During the colonial era, at least three Dutch companies were operating on adjacent lands. Tandai lies within the same 2,500 km2 SIPP as Lebong, and the Company and its Indonesian Partner, NPM, have commenced the process of transitioning the tenement into a separate exploration licence (IUP) under the New Mining Law.

Tandai is a high‑grade, epithermal, intermediate‑sulphidation system with gold‑silver mineralisation hosted by a series of veins distributed over a vertical extent exceeding 500 metres. The deepest levels of the mine were still in production when abandoned during the Japanese invasion of WWII. Historic Dutch production totalled 1.4 million ounces of gold and 15 million ounces of silver at a grade of 15.4 g/t gold, and 167 g/t silver. During WWII the Japanese focused on recovering copper from the

Figure 11: Extent of the Tandai epithermal system and prior mining activity

district. The mine was re‑opened temporarily in 1986 and during 6 years of operations, a further 150,000 ounces of gold were produced.

Despite the long history of production a multi million ounce exploration target potential remains as work conducted by the Company and its Indonesian Partners demonstrates the Dutch to have exploited a modest portion of the large geologic system.

The first objective of the Company and its Indonesian Partners is to identify open‑pittable resources in the vicinity of the old underground mines. Current informal activity is at, or close to, the surface and indicates that these objectives are realistic. Dutch production records identify that approximately 1.0 million ounces of the high‑grade gold‑silver mined was recovered solely from the Tandai vein and this represents only 15% of the strike‑length of veining identified by the Company’s geologists (Figure 11).

SE

CT

ION

FIV

EF

or p

erso

nal u

se o

nly



Work conducted by the Company and its Indonesian Partners to date includes geological mapping, soil and drainage geochemistry, trenching, development of a 3D geological model, ground magnetics and a modest programme of diamond drilling. Surface and underground sampling and drilling in late 2007 confirmed significant gold and silver values in the footwall and hanging wall to the old stopes (Figure. 12). This is best demonstrated by drill hole 9A which returned 72.9 metres at 1.99 g/t gold (22 metres true width) even though the higher grade gold ore had been extracted by a 2 metre wide stope intersected in the drill hole.

Exploration has also confirmed the presence of substantial mineralised structures to the north (Toko Rotan) and south (Glumbuk) of the east‑west corridor hosting the mined veins (Figure 12). These two structures were known to the Dutch and a limited amount of mining was conducted on Glumbuk.

Figure 12: Long section through the former Tandai underground mine

A modest amount of sampling has been conducted at the latter and encouraging gold values have already been identified at surface above the underground workings. Figure 12 depicts the extent of identified veining and breccias identified by the Company, and more may be discovered as the system has not been fully explored.

The Company and its Indonesian Partners’ work has identified the Tandai system to be larger than previously understood. The intermediate‑sulfidation nature of the system indicates there is a magmatic component to the system from a buried intrusive. Proximal to this, there may be other styles of mineralisation and which might explain molybdenum anomalies in the drainages on the west side to the system. A large soil anomaly identified by the Company may also reflect an additional style of gold‑silver mineralisation on the property.

SE

CT

ION

FIV

E

For

per

sona

l use

onl

y



Due to the size of the geologic system (Figure 13) and the limited historical data recovered to‑date, the Company has yet to identify the system’s overall zonation, and where the centre to the system most probably lies. The main exploration targets lie within and immediately adjacent to the old mine with the most prominent being the 3km long Glumbuk structure, which is parallel to Tandai, and was only partially mined from underground by the Dutch.

Work on the Lebong Project has demonstrated the recovery of historic Dutch data can accelerate the rate of progress. As much of the Tandai data was lost during a change of ownership, the Company and its Indonesian Partners have recently begun researching archives in Holland and Indonesia to locate historical mining data to advance the project. The Company and its Indonesian Partners intend to conduct further geochemical surveys to define future drilling targets.

Figure 13: Tandai exploration target, extensive highly anomalous soils

5.6 Other Exploration Projects

The Company and its Indonesian Partners have an active program to evaluate and acquire additional prospective precious and base metal properties within Indonesia. Any opportunities and their potential fit with this overall strategy of the Company will be determined once evaluation is complete. The Company has already acquired three authorisations, one in Jambi and two in Madina (North Sumatra). While some field work has been conducted in relation to Jambi and Madina, the Directors do not yet ascribed any material value to them.

SE

CT

ION

FIV

EF

or p

erso

nal u

se o

nly



5.7 Proposed Exploration and Development Plan

Year 1 of the planned exploration strategy will focus on Tembang as the Company and its Indonesian Partners intend to conduct up to 6,500 metres of drilling to increase the resource base. The objective is to increase the total ounces available to be mined from the pits already identified during optimisation studies.

Assuming success in the first phase of drilling, during Year 2 the Company will focus on Sontang. Additional drilling will be conducted to further determine the extent of the massive sulfides associated with the polymetallic manto. This second phase of drilling is expected to total 3,500 metres.

Year 1 (A$)

Year 2 (A$)

Tembang

Drilling and assays 1,008,169 ‑

Environmental (Amdal permit) 156,250 ‑

Land, permitting, community 53,975 54,600

Staff, labour, camp support, travel 581,325 581,325

Consultants 133,875 133,875

Total 1,933,594 769,800

Sontang

Drilling and assays 240,000 700,000

Drainage and soil geochemistry 75,000 ‑

Ground‑based EM survey 68,750 ‑

Geochem and geophysics interpretation 93,750 ‑


Staff, labour, camp support, travel 327,531 327,531


Total 1,011,961 1,172,595

Lebong

Drill test of structure footwall to Donok ‑ 400,000

Acquisition of Dutch data 56,250 ‑


Staff, labour, camp support, travel ‑ 163,766


Total 162,175 669,691

Tandai

Holding costs, including Jambi and Madina 36,600 36,600



Total 124,725 68,475

Total for all Projects 3,232,455 2,680,561*

* Application of funds is based on the full subscription amount of $12 million being achieved.

SE

CT

ION

FIV

E

For

per

sona

l use

onl

y



TOTAL FOR ALL PROJECTS Year 1 (A$) Year 2 (A$)

Drilling and assays 1,248,169 700,000

Drill test of structure footwall to Donok ‑ 400,000

Environmental (Amdal permit) 156,250 ‑

Drainage and soil geochemistry 75,000 ‑

Ground‑based EM survey 68,750 ‑

Geochem and geophysics interpretation 93,750 ‑

Holding costs, including Jambi and Madina 36,600 36,600



Staff, labour, camp support, travel 908,856 1,072,622


Total 3,232,455 2,680,561*

* Application of funds is based on the full subscription amount of $12 million being achieved.

The actual expenditure of the Company may vary from the budgeted expenditure above, depending on the circumstances of the Company.

SE

CT

ION

FIV

EF

or p

erso

nal u

se o

nly


SE

CT

ION

SIX

Board and Management

6.1 Directors and Company Secretary

Mr Warwick George Morris BSc (Hons), MSc, MAusIMM

Non‑Executive Chairman

Warwick Morris is an Australian national who was appointed to the board of the Company in March 2008 and shortly afterwards took over as Chairman. Mr Morris graduated from Sydney University with a degree in Geology and a Master of Science in Geochemistry Research. He is a member of the Australasian Institute of Mining and Metallurgy and has more than 30 years experience in the resources industry.

Mr Morris has most recently served as an executive director of Macquarie Bank Limited (‘Macquarie’), where he has been both Chairman of the Metals and Energy Capital Division and head of Metals and Mining. In addition he was co‑founder of the Macquarie Energy Capital business, centered in Houston USA. Mr Morris has also held a directorship with Wine Planet Holdings Ltd, and was, before joining Macquarie, manager of the Mining Division of Minproc Engineers in Perth where he was responsible for managing feasibility studies into numerous gold mining projects around the world.

Mr Jocelyn Severyn de Warrenne Waller MA (Hons) (Cantab)

Managing Director

Jocelyn Waller is a British national who is a founder shareholder and Director of the Company. Mr Waller graduated from Churchill College, Cambridge with a Master of Arts in History in 1965 and has since spent his entire career in the mining industry. For 22 years he worked for the Anglo American group and was involved variously with tin mining (Malaysia and Thailand), copper/cobalt (Zaire), potash (UK), tungsten (Portugal), exploration and metal sales (London).

In 1989 he set up Avocet Mining plc (‘Avocet’) and as CEO developed the Penjom gold mine in Malaysia and listed Avocet on the London Stock Exchange. In 2000 he set up Trans‑Siberian Gold (‘TSG’) to develop gold projects in Eastern Russia listing TSG on the AIM market of the LSE in 2003.

Mr Alan Robert Flint BSc (Hons), ARSM, Exec MBA, MAusIMM

Director of Exploration

Alan Flint is a British national who is a founder shareholder and Director of the Company. Mr Flint graduated from the Royal School of Mines with honours, the J.L. Kellogg Graduate School of Management and the Wharton School where he received his Executive Master of Business Administration.

Mr Flint has 30 years experience in the industry, commencing his career in Brazil with Rio Tinto. From southern Europe he moved to Indonesia joining Newmont Mining in 1986. He spent fifteen years with the company, leading the team that discovered Manmanok in the Philippines (now held by Anglo), and gained production experience on the Carlin Trend where he led a team that revised the genetic model for these multi‑million ounce gold systems. He identified Balabag in the Philippines for acquisition which will be TVI Pacific’s next gold‑silver mine. He lives in SE Asia.

Lord Daresbury MA (Hons) (Cantab)

Non‑Executive Director

Peter Daresbury is a British national who was appointed as a non‑executive Director of Sumatra in July 2007. Peter Daresbury graduated from Cambridge University with a Master of Arts (Hons) in History, and later graduated from the London Business School following an executive management program.

Peter Daresbury has served as CEO and Director of a number of publicly listed companies. His recent mining sector experience includes being executive and non‑executive Chairman of Highland Gold Mining and Kazakh Gold Group respectively. Current directorships include non‑executive chairmanship of Mallett plc, Nasstar plc and Aintree Racecourse Company Limited.

Dr Michael Allan Price CEng, FEANI, BSc, PhD (Mining Engineering)

Non‑Executive Director

Dr Michael Price is a British national who was appointed as a non‑executive Director of Sumatra in July 2007. Dr Price qualified with a PhD from the University of Cardiff and has over 30 years of mining and mining finance experience.

Dr Price gained financial institution experience at Rothschild, Societe Generale and Barclays Capital. He is currently a consultant and advisor to Resource Capital Funds, a resource‑focused private equity fund. Additionally, Dr Price has extensive board experience of junior mining companies through a number of past and present non‑executive directorships.

Mrs Alison Barr Company Secretary

Alison Barr is a British national who was appointed as company secretary of Sumatra in December 2006. Mrs Barr graduated from University College, London with a Bachelor of Laws and qualified as a solicitor in 1974. She is head of the Commercial Department at Barr Ellison LLP, Solicitors, who have been legal advisers to Sumatra since December 2006.

For

per

sona

l use

onl

y


SE

CT

ION

SIX

Board and Management Cont.

6.2 Corporate Governance

The Company’s Board of Directors is responsible for corporate governance of the Company. The Board develops strategies for the Company, reviews strategic objectives and monitors performance against the objectives of its corporate governance process listed below. The objectives of the corporate governance processes are to:

maintain and increase shareholder value; •

ensure a prudential and ethical basis for the •Company’s conduct and activities; and

ensure compliance with the Company’s legal and •regulatory objectives.

Consistent with these objectives, the Board assumes the following responsibilities:

developing initiatives for the augmentation, •exploration and development of the Company’s assets;

reviewing the corporate, commercial and financial •performance of the Company on a regular basis;

acting on behalf of, and being accountable to, the •Shareholders; and

identifying business risks and implementing actions •to manage those risks and corporate systems to assure quality.

The Company is committed to the circulation of relevant materials to Directors in a timely manner to facilitate Directors’ participation in the Board discussions on a fully‑informed basis.

(a) Composition of the Board

Subject to the appointment requirements in the Articles of Association of the Company, the Company is committed to the following principles:

the Board is to comprise Directors with a blend of •skills, experience and attributes appropriate for the Company and its business; and

the principal criterion for the appointment of •new Directors is their ability to add value to the Company and its business.

No formal nomination committee or procedures have been adopted for the identification, appointment and review of the Board membership, but an informal assessment process, facilitated by the Chairman in consultation with the Company’s professional advisors, has been committed to by the Board.

(b) Independent Professional Advice

Subject to the Chairman’s approval (which is not to be unreasonably withheld), the Directors, at the Company’s expense, may obtain independent professional advice on issues arising in the course of their duties.

(c) Remuneration Arrangements

Subject to the Companies Act, the ASX Listing Rules and the Company’s Articles of Association the aggregate annual remuneration of Directors must not exceed £1,000,000. The determination of Directors’ remuneration within that maximum will be made by the Board having regard to the inputs and value to the Company of the respective contributions by each Director.

The Board may award additional remuneration to Non‑Executive Directors called upon to perform extra services or make special exertions on behalf of the Company.

The Company has established a Remuneration Committee consisting of the two Non‑Executive Directors, Lord Daresbury and Dr Michael Price. Lord Daresbury is Chairman.

(d) External Audit

The Company in general meetings is responsible for the appointment of the external auditors of the Company, and the Board from time to time will review the scope, performance and fees of those external auditors.

(e) Audit Committee

The Company has an Audit Committee consisting of the two Non‑Executive Directors, Michael Price and Lord Daresbury. Dr Michael Price is Chairman.

(f) Identification and Management of Risk

The Board’s collective experience will enable accurate identification of the principal risks that may affect the Company’s business. Key operational risks and their management will be recurring items for deliberation at Board meetings.

(g) Ethical Standards

The Board is committed to the establishment and maintenance of appropriate ethical standards.

(h) ASX Corporate Governance Recommendations

The Corporate Governance Principles and Recommendations of ASX (ASX Recommendations) set out corporate governance guidelines for ASX listed companies. The Board has not formally adopted the ASX Recommendations on the basis that they do not consider that they are all appropriate for the Company given its size and operations as a mineral exploration company.

Consistently with the ASX Recommendations, the Company will in its annual reports detail its corporate governance policies and identify any recommendations which have not been followed and the reasons for not doing so.

For

per

sona

l use

onl

y


Independent Technical Report

SE

CT

ION

SE

VE

N

For

per

sona

l use

onl

y


Independent Technical Report Cont.

SE

CT

ION

SE

VE

NF

or p

erso

nal u

se o

nly