Indo Mines updates Indonesian coal projects
Friday, July 29 2011 - 04:13 AM WIB
Mangkok Coal Project
During the quarter the Company completed a comprehensive review of operational procedures and practices at the Mangkok Coal Project, located in the major coal producing region of South Kalimantan, 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. This focus on increased production and emphasis on cost control has significantly improved the cash flow of the Project.
The quality of coal produced from the Mangkok Project is consistently in the range of 6,500kcal to 7,200kcal making it a desirable Indonesian coal. Further, a revised mine plan has been implemented which has changed 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.
To support the changes outlined above the Company has cancelled the forward sales arrangement entered into in May 2010 with Merrill Lynch. This 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.
As of 30 June 2011, the Company held 13,295 tonnes available for sale on stockpile.
Exploration has continued 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.
Corporate
On 6 June 2011 the Company announced the completion of a placement of 18.6 million ordinary shares at $0.55 each to institutional and sophisticated investors to raise $10.2 million before costs.
Funds raised will be used to expedite the development of the commercial trial iron sands concentrate plant. Additl6nal funds will be dedicated to working capital and the assessment of new project opportunities including the Halmahera Iron Project.
Separate to the placement, Rockcheck Steel Co acquired a parcel of 16 million Indo Mines shares in an off-market arrangement consistent with the placement price of $0.55 each, significantly increasing its shareholding in the Company to approximately 18%.
The Company continues to assess opportunities to add value for shareholders by expanding the range of commodities it can supply to the Indonesian and wider Asian steel industry. (end of excerpt)