Iluka sells Koba Tin

Australian mining firm Iluka Resources Limited announced on Friday that it had agreed to sell its 75 percent stake in Indonesian tin mining firm PT Koba Tin to Malaysia Smelting Corporation Berhad (MSC) for up to US$20 million.

According to Iluka, the agreement includes a US$14 million cash payment and a deferred contingent component of up to US$6 million over three years, based on LME tin prices.

MSC Executive Director Dato' Mohd Ajib Anuar said that synergies between the Company's existing Malaysian operations and the Bangka Island assets of Koba Tin would allow for significant cost reductions and efficiency improvements.

He said the purchase of Koba Tin interests was an important strategic investment, which would help MSC to make the most of the region's tin reserves.

MSC, a specialist tin producer, operates a custom 25,000 tons per annum tin smelter in Penang, Malaysia.

Iluka Managing Director Mr Malcolm Macpherson said the sale of Koba Tin was part of the Group's increased focus on its core titanium minerals business. The Koba Tin contribution to Iluka's earnings has declined in the past two years, accounting for less than 1 percent of group profit in 2000.

The sale is subject to the approval of MSC shareholders. Malaysia Mining Corporation and The Straits Trading Co, which have 38.19 percent and 39.99 percent stake at MSC, have indicated their intention to vote in favour of the transaction.

The transaction, subject to the approval of the Malaysian regulatory authorities, is expected to be completed in December. (alex)