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Digging for gold in Sumatra
Digging for gold in Sumatra

Sumatra Copper and Gold exploration manager Matt Farmer says getting to the company's Tandai project is an "Indiana Jones" experience.

Apart from a helicopter ride, the only way in is via a twisting miniature railway that snakes its way up to Lebong Tandai, a community of about 900 that ekes its living out of hand mining narrow veins of gold-bearing quartz in the area.

There was never a Temple of Doom in Tandai, but the 1.4 million ounces of gold and 15moz of silver extracted from underground mines first by Dutch companies in the early part of last century, and then by the CSR-run Lusang Mining from 1985 to 1995 is very nearly as impressive. Lusang, which abandoned Tandai when the gold price dropped below $US300 per ounce, refurbished the town. The company's dormitory and recreational buildings still survive, which now mostly supplement the ramshackle wooden housing built by Tandai's residents.

But it's the Dutch-built railway that reminds Mr Farmer of the famous Harrison Ford movies. The "moleks" that make the 2 1/2 -hour journey between Lebong Tandai and the nearest bigger town, Napal Putin, along the narrow-gauge track are hand built in Tandai by their owners, then fitted with small, mostly-Chinese made engines.

They wind their way up the steep gorges to Tandai, crossing streams and gullies on short, rickety bridges, and reportedly even running through several short tunnels carved by the Dutch through the hillsides.

Their two-stroke engines can carry them to perhaps 40km/h at most, though the twisting route and poor state of the track make top speed a rarity. It's a single line for most of the trip and when two trains meet one is lifted by hand from the track to allow the other to pass, then replaced.

The trains carry passengers and supplies for the township - and even occasionally tourists. On a recent site visit to Tandai organised by Sumatra, analyst and brokers were briefly joined in the town by three camera-festooned Japanese tourists, happy to spread around rupiah to help them capture enough good shots to carry them through to their next holidays.

Lebong Tandai is clearly poor, but not poverty-stricken. Sumatra Copper and Gold is the only employer in town, with the rest making their living from artisanal gold workings. Mr Farmer estimates local miners pull somewhere between 500 and 1000oz of gold from the hills each year, processed in half a dozen crushing and washing facilities powered either by diesel engines or by the river that runs through the middle of the township.

Mr Farmer says Sumatra has a good relationship with local miners. The company has the rights to explore around 1000sqkm of the rugged terrain around Tandai, and any mine is probably many years away. But the cash the company brings into town, as well as the long-term hope of steady jobs in a future mine, means the locals are more than happy to see the company operating in the region.

And the activities of the local miners aren't a worry for Sumatra Copper and Gold either, because the company is out chasing elephants.

Its exploration campaign is funded by a joint venture with Newcrest mining in the hope of finding a replacement for its massive Gosowong mine. Newcrest, earning a stake at Tandai through its exploration funding, is hoping for another two million ounce discovery, or above.

It's a tough place to explore. Sumatra is operating a single drilling rig, which is broken down and either carried by helicopter around the regional exploration sites, or physically lugged by a team up and down the steep hills.

According to Sumatra's exploration geologists there is no lack of available gold targets on their sites, the issue is how close you can get the rig to a promising site. Drilling has returned more than positive signs, however.

One hole from the Lusang North prospect found a 22m width averaging 4.5 grams per tonne gold and 7gpt silver - not enough for Newcrest, but a solid prospect for further Sumatra drilling in the future. <div class="endnote">

Nick Evans travelled to Sumatra as a guest of Sumatra Copper and Gold </div>