Ann: Equity Funding Package for Development of Te, page-3

re: Ann: Equity Funding Package for Developme... Investment recommendation:
Sumatra Copper & Gold (“Sumatra”) is an emerging producer and minerals exploration company with 100%
ownership of 7 exploration licences covering 3,219 km² in Central Sumatra, Indonesia.
Sumatra’s projects are located in the central and southern parts of Sumatra, a region known for substantial
mineral endowment where more than 3 million ounces of gold and 25 million ounces of silver are reported to
have been produced.
The Company has 3 principal projects comprising two gold-silver projects (Tembang and Tandai) that were
previously in production and a third project, Sontang, which is a greenfield discovery (gold, silver, lead, zinc
and copper).
The JORC mineral resource for Tembang was further defined in August 2011 following a 5,618 metre infill
drilling program. The Project has a total combined resource of 22.6 million tonnes containing 976,000 ounces
of gold at a grade of 1.35 g/t gold and 12.79 million ounces of silver at a grade of 17.6 g/t silver.
In April 2012, Sumatra announced a JORC compliant Ore Resource of 513,000 ounces gold equivalent for
Tembang, based on the published mineral resource.
73% of the Measured and Indicated vein mineral resource has been converted into the Reserve category,
further strengthening the Tembang Project´s robust economics and on track for production in the first half of
2013.
In September 2012, Sumatra announced the completion of the DFS for Stage I and the completion of the PFS
for Stage 2, which improves the total Tembang Project economics and increases the scale of the operation.
Total Tembang Project gold production after Stage 2 is estimated at 395,000 ounces of gold and 4.83
million ounces of silver at a cash operating cost of US$ 431 over a mine life of 8 years.
On December 18, 2012, Sumatra announced the granting of the “In-principle Borrow and Use permit” or
“Pinjam Pakai” signed by the Minister of Forestry and is targeting the final Pinjam Pakai to be granted late first
quarter 2013.
Under a joint venture with Newcrest Mining, Sumatra is currently exploring the Tandai Project (30% Sumatra
– 70% Newcrest). Newcrest has already met its minimum expenditure portion of US$ 1.75 million and has an
option to earn a 70% interest by spending US$ 12 million over 5 years.
Sumatra has found significant gold mineralization at Tandai, which has a historic high-grade production of 1.4
million ounces gold.
Based on the estimated net operating cash flow of US$ 71 million for the Stage I Belinau Deposit, which represents
only 13% of the Tembang resource and Newcrest to spend US$ 12 million over 5 years on developing
the Tandai Project to earn a 70% interest, in our view, at a current market capitalization of just A$ 55.6million, Sumatra is strongly undervalued.
We have increased our next price objective from A$ 0.40 to A$ 0.50.
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