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Finders Resources to lift Wetar copper production to 7,000 tonnes/yr

Finders Resources (ASX, LON: FND) has updated progress at the Wetar Copper Project on Wetar Island, Maluku Barat Daya in eastern Indonesia, with a Demonstration Plant and associated heap leaching facilities currently producing some 5 tonnes per day of high quality cathode copper.

The Wetar Copper Project (currently ~94% Finders) comprises two high grade copper deposits at Kali Kuning and Lerokis, together constituting a Proven and Probable Ore Reserve of 8.2 Mt @ 2.5% Cu using a 0.5% Cu grade cut-off.

Finders, in partnership with PT Batutua Kharisma Permai (BKP), on the basis of a positive Definitive Feasibility Study is currently completing detailed engineering and capital cost estimates for Stage 1 of two-stage ‘brownfields’ expansion, planned to lift copper cathode production to 7,000 tonnes per year by expanding the current Demonstration Plant.

Subject to permitting and project financing, Finders expect to commence construction activities for Stage 1 by late Q3 2010.

Chris Farmer, managing director, said, “On the technical side, the successful operation of the Demonstration Plant provides us with significant confidence for the planned expansion and we have also benefitted from the proprietary knowledge gained from almost 17 months of sulphide leach operations."

"We continue to benefit from high levels of support from key departments of the Indonesian Government and the Province of Maluku and share their confidence that the Wetar Copper Project will play a key role in regional development.”

The Stage 2 project expansion to increase cathode production to ~23,000 tonnes per year will incorporate the bulk of the Whim Creek SX-EW plant (purchased by Finders from Straits Resources) and is expected to follow approximately a year after Stage 1.

The company said the Demonstration Plant has now produced approximately 1970 tonnes of copper cathode and the last six months have seen production at 96% of nameplate totaling 869 tonnes with sales of 800 tonnes at an average price of approximately US$7,100 per tonne (US$3.22 per lb.).

With 1,000 tonnes of potentially leachable copper remaining in the test heaps, copper recoveries approaching 70% from Heap 3 and predicted slower leach rates, the demonstration stage of the project is entering a new phase with a focus on upgrading equipment for the Stage 1 expansion and further experimenting with the operating parameters including Eh ranges targeting specific copper minerals.

The Stage 1 expansion will incorporate the whole of the current Demonstration Plant, expansion of the SX-EW plant and power supply, and new leach pads located within the old gold mining area immediately adjacent to the Kali Kuning ore-body.

To this end, the crusher has been refurbished, modifications completed on the SX plant and the neutralisation plant is being extended with larger tanks and the addition of a filter press.

The effects on leach rates by varying aeration and irrigation rates are being assessed and this work includes detailed size fraction assays and mineralogical studies.

Finders said detailed Stage 1 engineering design has been completed and all supplier and contractor tenders and inquires have been issued. Responses are due by mid July and this would allow for a revised capital estimate and schedule of Project delivery to be completed by end of July 2010.

Design work has commenced on components of Stage 2 based on importing and installing the Whim Creek plant now disassembled and packed in containers at the Whim Creek site. The company is aiming to provide a revised capital estimate for Stage 2 in the fourth quarter 2010 based on optimization of earthworks and use of Indonesian contractors.

As previously reported, Finders obtained its environmental impact assessment approval (AMDAL) in late March 2010. Following this approval, supporting documents in relation to the application for the Mining Permit required for Stage 1 and Stage 2 have been reviewed by a team from the Mines Department from the Province of Maluku and the Kabupaten (or sub-district) of Maluku Barat Daya.

The company expects a recommendation from the Mines Department for the Bupati to proceed with the issue of a mining permit during July. The result of the review indentified minor clarifications and requests for additional information which are expected to be completed within the next few weeks.

In advance of the award of the Mining Permit, a suite of follow-on permits which allow for import of equipment and construction activities to proceed have been progressed. Finders’ Indonesian operating company, PT Batutua Tembaga Raya (‘BTR’) has applied for a capital expansion with the Foreign Investment Board which will allow use of the “masterlist” facility to import equipment.

In addition, BTR has applied for a Building Permit, which when issued coupled with the existing environmental permit (AMDAL) allows for construction of the expanded SX-EW plant (Stage 1).

The company is currently seeking further clarification in regard to its application for a Location Permit, a form of land use permit, following an inconsistency identified between advice and permits obtained from the local government and the Forestry Department.

As a contingency measure, BKP is in the process of lodging applications for a forestry permit, supported by a recommendation from the Governor of Maluku. Deferral of the
permit may affect the startup of Stage 1. Finders will provide an update once further clarity is obtained.

Finders has received six provisional term sheets from potential sources of debt finance in respect to the Stage 1 expansion and scoped to accommodate Stage 2. The term sheets are currently being reviewed with a view to selection of a short list earmarked for the negotiation of definitive terms.

A number of representatives from potential lenders and Behre Dolbear Australia, as independent technical consultants, have completed site visits. The company is also considering other financing alternatives.