Indo Mines gets support from parent as it seeks partner for Kulon Progo project
Monday, May 1 2017 - 05:31 AM WIB
ASX-listed Indo Mines Limited announced Monday the financial support of the company?s majority shareholder, Indonesia?s Rajawali Corpora, as it progresses discussions with a potential strategic partner in developing a trial smelter facility at the company?s Kulon Progo project in Kabupaten Kulon Progo, Yogyakarta.
Indo Mines said in a statement that a Letter of Support and financial assistance through two working capital facilities, one for US$150,000 and one for US$750,000, will be provided by Rajawali until June 30, 2017 to cover any working capital shortfall arising whilst negotiations are completed.
?Rajawali has consented to this support based on the advanced stage of the negotiations,? Indo Mines said in the statement.
Finalization of financial support documentation will allow Indo Mines to release its half year report and at that point the company expects to request the ASX to lift the suspension of trading of the company?s shares.
Indo Mines subsidiary, PT Jogja Magasa Iron (PT JMI) and its local partner PT Jogja Magasa Mining have been in discussions with a potential strategic partner since September 2016. Although specific details cannot be provided at this stage, a basic outline of the potential deal structure is provided below.
First stage of the partnership will see development of a trial furnace facility to process Kulon Progo iron sands to finished steel. The strategic partner would finance and develop the furnace facility utilising their technology to process the iron sand concentrate. To provide feedstock to this facility PT JMI would develop a beneficiation plant.
Key advantages of this structure include the following;
1. Lower capital cost commitment and financial raising would be required from PT JMI.
2. Removes the need to obtain an export license for iron sand concentrate.
3. Allows retention of the existing Contract of Work and removes the need to covert to an IUPK license.
4. PT JMI can focus on the less technically sensitive mining and beneficiation rather than the hot-metal and steel production process.
5. The project is developed on a modular basis, and capacity can be increased as market conditions allow.
Editing by Reiner Simanjuntak