Antam reports Q1 gold, nickel exploration activities

The following is an excerpt from IDX-listed mining firm PT Aneka Tambang (Antam) on gold, nickel, bauxite and coal projects taken from the quarterly report ended March 31, 2012.

OPERATION AND SALES
In the first quarter of 2012 (1Q12), Antam?s unaudited net sales was recorded at Rp2.5 trillion, up 24% compared to 2011 (1Q11). The increase was primarily attributable to the increase in sales of ferronickel, nickel ore, and gold commodities.

As in 1Q11, gold remains the largest component of Antam?s 1Q12 revenue, accounting for 37% of the Company?s net sales in 1Q12 or amounting to Rp91 0.8 billion. In 1Q12, ferronickel sales had the ?second largest contribution to Antam?s total revenue after that of the gold (3 1%).

FERRONICKEL
The production volume of ferronickel during 1Q12 totaled to 3,631 tonnes of nickel contained in ferronickel (TNi), down 25% compared to 1Q11?s production tonnage of 4,836 TNi. The lower production volume was due to the temporary shut down of Ferronickel II Plant in Pomalaa, which was part of the implementation of the Ferronickel Plants Modernisation and Optimisation Project, as well as the consideration of the 2011?s in-transit ferronickel sales, whose revenue was recognized in 1Q12. The 1Q12?s ferronickel prodction achievement accounted for 20% of Antam?s 2012 ferronickel production target of 18,000 TNi.

In terms of sales, the sales of ferronickel hiked by 99% to 4,402 TNi, following the arri

val of Antam?s ferronickel shipments at tne customers? premises, which was dispatched at the end of 2011 and/or beginning of 2012. The 1Q12?s ferronickel sales reached 23% of the 2012?s sales-volume target of 19,500 TNi.

Despite the downward trend in global nickel prices, the 1012?s unaudited ferronickel net sales showed a 44% increase compared to the same amount in 1Q1 1 of Rp538 billion.

The increase in nickel ore net sales was mainly due to the period?s higher sales volume.

NICKEL ORE
In aggregate, Antam successfully produced 2,118,473 wmt of nickel ore in 1Q12, which consisted of 1,418,989 wmt of high grade nickel ore and 699,484 wmt of low grade nickel ore. The production achievement showed a 5% increase over the 1Q1 l?s production volume of 2,008,148 wmt, in line with the period?s prolonged high demand of nickel ore.

The 1Q12 nickel ore production achievement was followed by the sales of 1,769,649 wmt of nickel ore. This sales achievement increased by 9% compared to ast year?s sales volume of 1,626,806 wmt. Nonetheless, with the decline in global nickel prices, the increase in nickel ore sales volume only contributed a modest increase of 1% to the Company?s nickel ore net sales, from Rp654.2 billion in 1Q11 to Rp663 billion in 1Q12.

GOLD
The gold production achievements during 1Q12 decreased by 3%, from 588 kg in 1Q11 to 570 kg in 1Q12. From the current production figure, the Pongkor mine contributed 371,24 kg of gold while the balance was extracted from the Cibaliung mine. The gold-production degradation in 1Q12 was chiefly caused by the decreasing gold content of the gold ore mined from these two locations. Gold content is one of the Company?s uncontrollable factors, taking into account the fact that the Pongkor and Cibaliung mines are both underground mines.

In contrast with gold production volume, the 1Q12 gold sales increased by 3% to 1,783 kg from 1,730 in 1Q11. The striking difference between Antam?s gold production and sales volumes was caused by the sales of gold from third party?s refining. The 1Q12?s gold production and sales volume represents, respectively, 18% and 25% of the 2012 gold production and sales targets of 3,109 kg and 5.898 kg, respectively.

BAUXITE
During 1Q12 Antam recorded a bauxite ore production volume of 62,301 wmt, which was obtained from the Tayan mine, West Kalimantan. This achievement accounted for 62% of the 2012?s targeted bauxite-production volume of 100,000 wmt. The reason behind the modest target was the preservation of Antam?s bauxite reserves for the raw material of the chemical grade alumina processing plant in Tayan, which is scheduled to be in production in 2014.

COAL
Through its subsidiary, PT Indonesia Coal Resources, Antam had succesifully mined 124,310 tonne of coal from the Sarolangun mine, which was acquired at the beginning of 2011, or up by 96% compared to the 1Q11?s production volume of 63,287 tonne. The production achievement was followed by sales of 155,959 tonne of coal. The 1Q12?s productior~ and sales volumes represent 12% and 16% of the 2012 production and sales targets, respectively.

EXPLORATION ACTIVITIES
Antam?s exploration activities in 1Q12 were focused on nickel, gold, bauxite, coal, and limestone. As of March 2012, Antam?s total preliminary cost ot exploration activities had reached Rp39.4 billion.

NICKEL
Nickel exploration activities were conducted in Buli, North Maluku; Lasolo, Lalindu, Mandiodo, and Tapunopaka, Southeast Sulawesi; and Pulau Gag, West Papua. In general, Antam conducted grid measurement, topography measurement, drilling, drill track and holes measurement, core logging, sampling, test pitting, detailed geologic mapping , resistivity testing and sample preparation during its nickel exploration activities. .

As of March 201 2, Antam had spent Rp14.5 billion on nickel exploration activities.

GOLD
Antam conducted gold exploration activities at West Java, Banten, Jambi, West Sulawesi, and Papua. Antam had spent Rp22,8 billion as of March 2012 for gold exploration activities.

Exploration activities at Pongkor included, among others, detailed geological

mapping (DGM), core logging, hand-auger survey, sampling of rock, core, and soil, drilling, drill track measurement, geophysical survey with magnetic, gravity, and Controlled Source Audio Frequency MagnetoTelluric (CSMAT) methods, as well as geological modeling.

In Papandayan, West Java, Antam performed DGM, core logging, test pitting, core campling and drilling, geotechnical drilling, drill track measurement, and geophysical survey using magnetic, gravity, and CSMAT methods.

At Cibaliung, Antam conducted DGM, trenching, sampling ,core drillings, drill track measurement, as well as geophysics survey.

Meanwhile, at Batang Asai, iambi, Antam performed DGM, trenching, hand-auger survey, Fi and core sampling, petrographic and mineragraphic testing, core logging, magnetic geophysical survey, as well as trench and drill hole measurement.

At Mao, Batuisi and Karosa, West Sulawesi, Antam conducted DGM, rock sampling, drill track measurement using geodetic GPS.(end of excerpt)