Indo Mines updates Indonesian iron, coal projects
Monday, January 31 2011 - 03:09 AM WIB
Corporate Review
On December 23 the Company agreed to undertake a strategic placement of 20 million shares to Rockcheck Steel Co Ltd (?Rockcheck?) to raise $5.4 million. The placement has resulted in Rockcheck becoming one of Indo Mines? largest shareholders with a 10% stake in the Company.
A further $2.7 million will be raised from the issue of 10 million additional shares subject to shareholder approval at a meeting scheduled for 11 February 2011.
Rockcheck is one of the largest privately owned iron and steel producers in China. It has an annual iron making capacity of 5 million tonnes and is centered in Tianjin. Rockcheck was one of the first steel companies in China to introduce direct reduction iron making technology and now operates the world?s largest rotary hearth furnace, a process that can utilise up to 100% iron concentrate produced from iron sand.
Preliminary discussions with potential offtake partners for iron concentrate produced from both the trial and full-scale mining operations at the Jogjakarta Iron Project (?Iron Project?) have commenced with a view to entering into agreements in the first half of 2011.
Peter Hinner was appointed to the role of Feasibility Project Manager for the Iron Project in mid-December. Hinner brings a wealth of project management, operations and mineral process experience, having spent over 15 years in the Australian mineral sands and South American iron sands businesses, including roles with Australian Zircon NL, Tiwest Joint Venture, Consolidated Rutile Ltd and South American Iron & Steel Corporation Ltd.
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.
Jogjakarta Iron Project
The planned staged development of the Iron Project continued to take shape with the Board approving the commencement of commercial trials of iron concentrate production in the first half of 2011.
This decision, will allow the Company to generate modest early cash flow from the Iron Project while also building its operating expertise ahead of full-scale production in mid-2012.
A feasibility study assessing the potential to initially produce 2 million tonnes of iron concentrate per year from the Iron Project is scheduled for completion in June.
There is also further potential to produce 1 million tonnes of pig iron per year at a later date. A feasibility study for pig iron development will be completed in the next 18 months.
Subsequent to the quarter end, the Company received approval for the Environmental Impact Assessment scoping document (KA-ANDAL).
The KA-ANDAL approval enables Indo Mines to complete the environmental and social base line measurements and engineering design required to finalise the Feasibility Study for the Iron Project.
The KA-ANDAL was prepared in accordance with Indonesian legislation and international best practice and defines the scope and boundaries for the Iron Project with specific reference to:
? Environmental impact
? Social impact
? Risk management and mitigation
? Measurement and monitoring
Also subsequent to the quarter end, the Company announced the appointment of world leading minerals and metals technology company Outotec to complete the process evaluation and design of the Iron Project.
Outotec will complete a series of smelting trials using Direct Reduced Iron (DRI) produced from Jogjakarta iron concentrate to quantify the potential of producing I million tonnes of pig iron a year based on the Outotec? Circosmelt process.
The test work will be conducted at the Outotec Ausmelt pilot smelting furnace in Dandenong, Victoria. The results will enable the preparation of a Conceptual plant design and capital estimates.
Outotec is a leading global provider of process solutions, technologies and services for the mining and metallurgical industries, providing innovative and environmentally sound solutions and life cycle services.
Mangkok Coal Project
Coal production continued during the quarter at the Mangkok Coal Project (?Coal Project?) located in South Kalimantan, a major coal producing region of Indonesia. The open-cut mining operation is now producing at a consistent rate of >20,000 tonnes per month. The focus throughout the quarter has been the consolidation and application of operational procedures and standards. The emphasis on cost control and immediate gate sales of produced coal has improved the cash flow of the Coal Project.
Exploration is continuing across other significant coal opportunities both in the region and other locations across Indonesia. (end of excerpt)