Indo Mines, Merrill Lynch cancel coal sales deal

Australia-listed firm Indo Mines Limited said on Friday that it has agreed with leading financial management Merrill Lynch to cancel the forward sales arrangement entered into in May 2010 from Indo Mines? Mangkok coal project in South Kalimantan.

The cancellation agreement has enabled the company to switch the focus to a simple mine gate sales model thus eliminating logistics uncertainties and complexities from the business model allowing the company to take advantage of strengthening thermal coal prices, the company said in statement.

The company has recently completed a comprehensive review of operational procedures and practices at the project resulting in increased productivity and a significant reduction in operating costs. Subsequent changes to the operational structure of the business have led to consistent production of 25,000 tonnes per month.

Further, a revised mine plan is being implemented which incorporates changing the location of the ROM stockpile, crushing and weighing facilities. The revised mine plan will result in a targeted production level of 35,000 tonnes per month from August 2011, it said.

The quality of coal produced from the project is consistently in the range of 6,500 kcal to 7,200 kcal, it said.

Exploration is continuing across other significant coal opportunities both in the region and other locations across Indonesia, with a focus on meeting the coal requirements for the company?s Jogjakarta Iron Project.

Indo Mines Managing Director and CEO, Martin Hacon, said: ?These developments have allowed the Company to now focus management time on the key Jogjakarta Iron Project whilst the Mangkok Project provides a net positive cash flow to the Group. Indo Mines will continue to seek coal assets to feed our future requirements for iron making, to allow the Company to control its input costs to become one of the lowest cost pig iron producers in the world.? (romel)