H

ongkong-based mining company G-Resources Group Ltd. may begin producing silver and gold from the Martabe mine in North Sumatra as early as 2011, a senior official said.

"They expect to begin production within two years," Bambang Setiawan, director general for coal, minerals, and geothermal energy at the Energy and Mineral Resources Ministry, told reporters Thursday.

The Martabe mine is a gold and silver development project located about 40 kilometers from the port of Sibolga, North Sumatera. The mine covers a total area of 1,639 square kilometers.

The project was established under a so-called "sixth generation" contract of work (COW) signed in April 1997.

The mine is estimated to contain 2.2 million ounces of gold reserves and 29.7 million ounces of silver reserves.

G-Resources has begun construction for the project, which, once completed, is expected to produce gold at a rate of 250,000 ounces per annum and silver at 3 million ounces per annum.

G-Resources acquired a 95 percent interest in the Martabe project from Australia's OZ minerals in May this year. G-Resources stated that it had raised US$587 million to fund the acquisition of the development of the Martabe project.

The anticipated total development capital expenditures of the project stands at $360 million, of which around $76 million has already been spent, the company added.

Earlier this week, G-Resources announced it had found "outstanding high grade" gold and silver at the Martabe site over the past ten months.

"Drilling results confirm that significant potential exists to expand the existing resource base of 5.9 million ounces of gold and 61 million ounces of silver," G-Resources said in the statement.