G

-Resources Group Limited announced Thursday that the company had decided to increase its investment for the development of gold and silver mines in Martabe, North Sumatra, from US$440 million to $576 million due to estimated higher operating costs.

With the revision, the annual costs to operate the mine and processing plant at the site were
also estimated to increase by 30 percent to $130 million over the early 2010 estimate, with a 10 percent contingency included, according to a press statement sent by the company.

G-Resources vice chairman Owen Hegarty explained that the weakening of the US dollar and increased commodity prices had caused the costs of the Martabe project to soar.

“However, with rising gold and silver prices, the site’s production is projected to provide strong and sustainable cash flows to the company once it starts production,” he claimed.

The company says the capital expenditure and estimated operating costs will be funded from its existing cash and investments of $210 million plus a proposed bank debt facility of $225 million.

The proposed facility is scheduled to be available in the third quarter of this year.

The completion of engineering and procurement activities at the Martabe mining site has reached
95 percent, therefore, the company’s target to kick off gold production at the end of December this year is still feasible, the statement reveals.

Despite sustained daily rainfall in late March, the company claims the progress on the development of the site has run well. Earthwork activities on the plant site, tailings storage facilities, water dams, equipment storage areas and roads are progressing well, the company added.

The company reports that it is continuing with its aggressive exploration programs on the 1,639 kilometer-square mining area in Martabe. The company has in 2011 been committed to setting aside around $15 million for near mine and regional exploration programs.

In February 2011, G-Resources announced several drilling results at the Tor Uluala field in Martabe. These results showed huge potential for the discovery of additional gold deposits at the mining site.

The company announced earlier this month that Martabe’s proven gold reserve rose 11.6 percent to 3.03 million ounces and its proven silver reserves increased 2.5 percent to 33.63 million ounces, according to a report from Bloomberg.

Martabe is estimated to have a potential reserve of 6.5 million ounces of gold and 66 million ounces of silver.

G-Resources has been a publicly listed company in the Hong Kong Stock Exchange from April 1994.