The company achieved credit approval with lead arrangers Nomura Singapore and Indonesia Exim Bank and expects the facility to be completed this month.

Construction at Tembang is also expected to restart this month.

The facility will be drawn down in a lump sum after which the company will arrange gold hedging agreements with Nomura.

It is expected that 85% of cash generated from Tembang will be used for payment of the facility each quarter, with the balance of the debt to be paid in a bullet repayment at the end of a three-year term.

An interest rate of 7.5% increasing to 10% after 18 months will be paid quarterly with a redemption premium at the end of the loan period.

Sumatra will be required to raise $5 million in equity within six months of drawdown.

Terms of the funding also include the issue of 250.6 million warrants at A5.7c which will be convertible into one CHESS depositary interest.

The warrants will be subject to Sumatra shareholder approval and will have a term of three years.

Earlier this year, feasibility revisions at Tembang contemplated a five-year mine plan based on an updated reserve of 181,000 ounces of gold and 2.1 million ounces of silver.

The company is expecting average annual production of 33,000oz of gold and 345,000oz of silver at a total capital cost of $US71.1 million.

Forecast all-in sustaining costs were estimated at $745 per ounce, net of silver credits of $212/oz.

The revision is expected to allow Tembang to withstand significant fluctuations in the gold price and calculated financials assuming a price of $1300/oz.

Gold was last trading at about $1225/oz.

Tembang is in the Bengkulu district of the island of Sumatra and covers an area of about 850sq.km.

The project was in production for four years until 2000, when it closed due to a low gold price of about $250/oz.

Shares in Sumatra were last trading 6.7% lower at A4.2c.