Sumatra Copper & Gold : Tembang Production Update

SUMATRA COPPER & GOLD PLC

Registered No. 5777015

ASX Announcement: 18 September 2017

Tembang Exploration Update

Highlights

• Exploration strategic alliance formed with Merdeka Copper Gold to extend mine life and target production increases

• Initial investment of US$1.5 million over the next 6 months

• Exploration drilling from the base of Belinau underground mine anticipated to commence in the December 2017 quarter

• US$2.0 million of cornerstone support secured for US$7.5 million equity raise

Sumatra Copper & Gold plc ("the Company") provides the following update on exploration at its Tembang gold-silver operation located in southern Sumatra, Indonesia.

The Company is pleased to announce that it has formed a Strategic Alliance with Indonesian gold producer Merdeka Copper Gold Tbk ("Merdeka"), whereby Merdeka will fund ongoing exploration to extend mine life and target production increases.

Under the alliance, Merdeka will initially invest US$1.5 million over the next 6 months. The Company will in turn issue CDI's to Merdeka at a price representing the 5 trading day VWAP prior to the signing of a formal agreement detailing the specifics of the agreed exploration program. The CDI's will be issued to Merdeka in tranches based on the exploration spend by Merdeka during each 3 month period (quarter) and within 1 month of quarter end, with the first quarter concluding on 30 November 2017.

Ultimately Merdeka intends to invest in stages for up to US$10.0 million under similar terms for each successive approved exploration program, subject to ongoing exploration success and appropriate corporate approvals.

Merdeka is a Jakarta Stock Exchange listed mining company with a market capitalisation of approximately US$600 million. Merdeka currently operates the Tujuh Bukit gold-copper mine in East Java, Indonesia and has an experienced executive team headed by Mr Colin Moorhead. Mr Moorhead is a former Director of Exploration at Newcrest in Indonesia, responsible for the multi-million ounce Gosowong mine and Newcrest's past joint venture with the Company at Tandai. Merdeka is expanding its mining footprint in Indonesia and offers a strong balance sheet and technical expertise through Mr Moorhead and his team.

As previously disclosed in the Company's ASX announcement of 6 September 2017, two exploration drill drives will be established at the Belinau underground mine between Levels 11 and 12 (the current base of planned development) to drill for depth extensions to the orebody. Two specialised diamond drill rigs have been ordered for this program, which is anticipated to commence in the December 2017 quarter. A summary of the other priority exploration targets at Tembang is provided in the Appendix to this announcement.

The Company has also signed an agreement with its major shareholders Provident Minerals Pte Ltd and PT Saratoga Investama Sedaya Tbk to accelerate U$S2.0 million of the US$7.5 million Major Equity Raise planned for November 2017 under the Amended Facility as previously announced to the market on 27 June 2017. The funds will be provided by way of a subordinated loan that will be converted into equity in November 2017.

The Company's Chairman, Mr Jocelyn Waller commented: "The potential to increase resources and reserves at Tembang has long been recognised, but to date the Company's focus has been on

production. With this strategic alliance with Merdeka, the Company now has a strong local partner to enable the discovery process to be expedited. It's a significant and positive development for the Company that will add value."

For further information please contact:

David Fowler Phil Retter

Managing Director Investor Relations

Sumatra Copper & Gold plc NWR Communications

[phone] M: [phone]

[e-mail] [e-mail]

About Sumatra Copper & Gold plc

Sumatra Copper & Gold plc (ASX: SUM) is a gold and silver producer and precious metals explorer in southern Sumatra, Indonesia. The Company's flagship asset is its Tembang gold-silver mine, currently in production. The Company also has an extensive exploration portfolio with projects ranging from brownfield, near-production opportunities to strategically located greenfield holdings.

Directors

Jocelyn Waller Non-Executive Chairman	Gavin Caudle Non-Executive Director	Andy Robb Non-Executive Director
David Fowler Managing Director	Adi Sjoekri Executive Director
Contact Amberley Business Centre	Registered address
IBM Building, Level 3 1060 Hay Street West Perth Western Australia 6005	39 Parkside, Cambridge United Kingdom CB1 1PN Registered Number 5777015
T: + 61 8 9480 0620 E: [e-mail]	ASX Code: SUM

Web: www.sumatracoppergold.com

Appendix - Tembang Exploration Targets

The Tembang project area covers an extensive low to intermediate sulphidation, epithermal vein system hosted in a Tertiary (Miocene) volcanic centre. Historic and more recent exploration has defined multiple gold and silver mineralised vein and breccia systems, seven of which have been subjected to mining to date.

Exploration upside for "in-mine" and "near-mine" resource extensions and new semi-regional, potentially standalone targets which could be trucked to the Tembang plant, remains high. With the mining and milling operation now well underway, increasing in-mine and near-mine exploration activity with the aim of growing the resource inventory and extending mine life is a priority for the Company.

Belinau Underground

A review of diamond drill core and survey positions of the historical drilling has enabled a re- interpretation of the main Belinau vein and its disposition relative to the deeper drilling. At least two of the deepest holes did not intercept the Belinau vein, and pulled up short, possibly by a matter of only a few metres (Figure 1).

Figure 1: Belinau Underground Mine - NE end view of Belinau vein and underground development (current & planned) showing the two deepest drill holes that are now interpreted as having pulled up short of the projected position of the Belinau vein below the current resource

Good vein textures and grades are observed in drill core for the deeper holes that have intercepted the Belinau vein. Similarly drill core from the eastern part of the resource also display good vein textures although with narrower widths (~1m) and reduced grade (Figure 1). Pinch and swell features are typical for these types of veins, so it is possible that one or more of these holes may have intercepted pinch zones of the vein.

The significance of this finding is that the Belinau resource remains open at depth and possibly along strike to the east, and to a lesser extent the west.

Mine operations will be developing a drill access drive off the decline, and strike parallel to the vein from Level 11 (Figure 1). Resource definition and exploration drilling is anticipated to commence in the December 2017 quarter to intersect the main Belinau vein over a strike length of up to 700m, at 50m centres from Level 10 down to Level 13. Initially the program will entail 4,000m of LTK60 coring over a three to four month period. Should the results prove positive, drilling will continue to define additional resources, along strike and/or at depth.

Berenai Open Pit

The Berenai open pit comprises the Berenai, Central and Nuri veins (composite veins) and associated quartz vein stockworks. As at 31 December 2016, the Berenai-Central-Nuri deposit, comprises a total Measured, Indicated and Inferred Resource of 2.0 million tonnes at an average grade of 1.9 g/t Au and 29 g/t Ag at a lower cut-off grade of 0.5 g/t Au, for a total contained 122,100 ounces gold and 1,831,500 ounces silver. The Company anticipates completing a detailed review during the third quarter of 2017, following which, RC drilling and/or diamond drilling will commence to infill and/or extend the defined resources.

For example, the Berenai and Nuri veins are open at depth with historical drill intercepts comprising grades of sufficient tenor to warrant investigation for potential underground mining (Figure 2).

Figure 2: Berenai open pit (section through southern end of the pit) showing drillhole intercepts from historical drilling.