positive scoping study results , page-2

POSITIVE SCOPING STUDY RESULTS -
PUNGKUT GOLD PROJECT

Oropa Limited (“Oropa”) is pleased to announce the results of the Scoping Study conducted by
independent consultant SRK Consulting (Australasia) Pty Ltd (“SRK”), which confirms the
potential to develop a profitable operation at Oropa’s 75% owned Pungkut gold project in
Sumatra, Indonesia (“Pungkut”). The Scoping Study has been based on treatment of 1Mtpa
using a conventional Carbon in Pulp (CIP) circuit with open pit mining from the Sihayo 1 North
and Sambung mineral resources. Specific assumptions and outcomes from the study (100% of
project) are as follows:
Table 1: Summary of Scoping Study assumptions and results:
Nominal Plant Throughput 1Mtpa
Mineral Resources Scheduled Inferred Resources
Expected Mine Life 10 years
Total mineralised inventory processed 10.1 M tonnes
Expected Head Grade 2.43 g Au/t
Expected Gold Recovery 80%
Average Annual Production 63,000 tr. ounces
Stripping Ratio (t waste : t mineralised inventory) 3.8 : 1 (t/t)
Unit Cost per Tonne of mineralised inventory treated US$28.22/t
Cash Operating Costs per troy ounce of gold US$442/tr.oz
Gold price per troy ounce of gold US$800/tr.oz
Indicative pre-tax Net present value (NPV) (discount rate of 10%) US$50.3 million
Pre-tax IRR 25.8 %
Operating Costs
The Scoping Study has factored in the significant operating cost pressures faced by the industry
in recent times. Even allowing for these high costs, estimated production costs at Pungkut
compare favourably with recently announced costs from three of the world’s largest gold
producers, Barrick, Newmont and AngloGold-Ashanti, which reported September quarter
production costs of US$466/oz, US$480/oz and US$486/oz respectively.
Scoping Study Parameters
SRK was commissioned by Oropa to conduct a Scoping Study assessment on the Sihayo 1 North
and Sambung Inferred Mineral Resources which contain a combined 13.2 Mt at 2.4 g Au /t for
1.01 Moz of contained Au. (Table 2). It should be noted that the Scoping Study is based on an
Inferred Mineral Resource only and therefore the results must be interpreted cautiously.
25 Charles Street, South Perth WA 6151 PO Box 1013, South Perth WA 6951
Telephone: (08) 9368 4544 Facsimile: (08) 9368 4522
Web: www.oropa.com.au Email: [email protected]
ACN: 009 241 374
Inferred Mineral Resources can not be converted into Ore Reserves according to the 2004 JORC
Code guidelines.
Table 2: Sihayo 1 North and Sambung Mineral Resources
Project Inferred Mineral
Resources
Million tonnes
Grade
g/t gold
Contained Gold
Million ounces
Sihayo 1 North 12.1 2.4 0.91
(+1.0 g/t cut-off grade)
Sambung 1.1 2.6 0.10
(+1.5 g/t cut-off grade)
Combined Inferred Resource 13.2 2.4 1.01
The Scoping Study used the Whittletm pit optimisation software for pit optimisation and indicative
scheduling, on pit shells only, with an assumed gold price of US$800 per troy ounce. Mining
operating costs, treatment operating costs and capital expenditure were estimated by SRK.
Processing plant capital expenditure is based on using new plant and equipment. Oropa believes
the capital expenditure can be significantly reduced by using reconditioned plant and equipment.
Power costs were supplied by Oropa based on costs of similar operations in North Sumatra.
Mining and Processing
The Sihayo 1 North and Sambung pits will be mined using open pit mining, with drill and blast
methods. The mining fleet will be owned and operated by a mining contractor.
Indicative production scheduling by SRK aimed at providing 1 million tonnes of mineralised
inventory per year to the process plant, produced a 10 year life of mine schedule with an average
stripping ratio of 3.8 to 1. Processing will be conducted with crushing, grinding, and conventional
leaching using CIP. Metallurgical testing undertaken to date indicates an 80% recovery should be
achievable.
Capital Costs
SRK has estimated the total capital expenditure for new equipment and infrastructure at
US$75.6M, which includes owners’ costs, an allowance for contingencies and working capital.
Oropa’s directors believe there is considerable scope for optimisation of SRK’s projected capital
expenditure which would lead to a materially lower total initial capital outlay than assumed in the
Scoping Study. Specific factors supporting this are;
• The Australian dollar exchange rate has fallen to 63 cents from 85 cents (-26%) against
the US dollar since the Scoping Study assumptions were locked in.
• The Indonesian Rupiah has fallen to 12,000 per US dollar from 9,000 per dollar (-25%)
since the study assumptions were locked in.
25 Charles Street, South Perth WA 6151 PO Box 1013, South Perth WA 6951
Telephone: (08) 9368 4544 Facsimile: (08) 9368 4522
Web: www.oropa.com.au Email: [email protected]
ACN: 009 241 374
• Oropa and PT Sorikmas Mining’s management consider that local Indonesian construction
costs for access roads, general infrastructure, construction of tailings dam and the
fabrication of site buildings will be significantly lower than SRK assumptions.
• Fully equipped and refurbished second hand mills and treatment plants are currently
available in the market ready to be shipped at approximately 50% of the SRK estimates
for the concentrator capital.
Based on these factors, it is likely that the final capital expenditure could be reduced to between
US$40m and US$50m prior to contingencies, but including all owners’ costs and working capital.
At present, the above capital expenditure scenarios are indicative and actual capital expenditure
would not be established until the completion of a Bankable Feasibility Study. However, to
demonstrate the potential impact on expected project returns, Oropa has compiled three capital
expenditure structures, with their respective Internal Rates of Return, Net Present Values, and
Payback Periods as expressed in Table 3.
Case 1
SRK Scoping Study case with a total capital cost of US$75.6M
Case 2
Capital cost at US$50M
Case 3
Capital cost of US$40M
The following table presents the key financial outcomes of each capital expenditure scenario at
three assumed gold prices; US$800, US$900 and US$1000 per troy ounce. At the close of US
trading on Friday 21st November 2008, spot gold prices were US$799/oz.
Table 3: Capital Cost Variations and IRRs
Gold Price Pre-Tax
Net Present Value
(NPV) @ 10%
Discount Rate
Pre-Tax
Internal Rate of
Return (IRR)
Pre-Tax
Initial Capital
Payback
(years)
Case 1:
SRK Estimate
Capex at
US$75.6m
US$800/tr.oz US$50M 26% 3.2
US$900/tr.oz US$85M 35% 2.5
US$1000/tr.oz US$120M 44% 2.1
Case 2:
Capex at
US$50m
US$800/tr.oz US$75M 43% 2.1
US$900/tr.oz US$110M 56% 1.7
US$1000/tr.oz US$145M 69% 1.5
Case 3:
Capex at
US$40m
US$800/tr.oz US$84M 55% 1.8
US$900/tr.oz US$119M 70% 1.5
US$1000/tr.oz US$154M 85% 1.3
25 Charles Street, South Perth WA 6151 PO Box 1013, South Perth WA 6951
Telephone: (08) 9368 4544 Facsimile: (08) 9368 4522
Web: www.oropa.com.au Email: [email protected]
ACN: 009 241 374
Table 3 demonstrates that the financial returns are strong in all 3 cases at current gold prices of
around 800 US$/tr.oz and more importantly, are particularly attractive at higher gold prices.
Potential reduction in capital expenditure would result shorter payback periods and higher IRR.
Future Development
SRK concludes that “...if the many assumptions used are representative of the deposit, then the
project would appear to be both technically and economically feasible. More security would be
given by a longer life.”
The positive results of the Scoping Study clearly support continued exploration and development
efforts at Pungkut. Priorities will be conversion of the existing Inferred Mineral Resources at
Sihayo 1 North and Sambung to a higher classification of Mineral Resources through infill drilling.
Recent drilling results at the newly discovered “Old Camp Area” indicate there is a strong
likelihood of further mineralisation being discovered at Sihayo 1 North. If further mineralisation is
discovered it will create an opportunity to extend the assumed 10 year mine life. Alternatively
additional gold inventory might be used to support a larger mill size and higher annual gold
production.
Yours faithfully
OROPA LIMITED
Philip C Christie
Director
Note 1: The information in this report that relates to exploration results, geochemical data base, quality assurance/quality control and
geological interpretation of the Sihayo 1 North and Sambung Mineral Resource is based on information compiled by Mr
Dean Pluckhahn, who is a Member of The Australasian Institute of Mining and Metallurgy and the Australian Institute of
Geoscientists. Mr Pluckhahn is employed by Oropa Limited and has sufficient experience which is relevant to the style of
mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent
Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and
Ore Reserves’. Mr Pluckhahn consents to the inclusion in the report of the matters based on his information in the form and
context in which it appears.
Note 2: All statements in this report, other than statements of historical facts that address future timings, activities, events and
developments that the Company expects, are forward looking statements. Although Oropa Ltd, its subsidiaries, officers and
consultants believe the expectations expressed in such forward looking statements are based on reasonable expectations,
investors are cautioned that such statements are not guarantees of future performance and actual results or developments
may differ materially from those in the forward looking statements. Factors that could cause actual results to differ materially
from forward looking statements include, amongst other things commodity prices, continued availability of capital and
financing, timing and receipt of environmental and other regulatory approvals, and general economic, market or business
conditions.