Indo Mines updates Jogjakarta liquid iron project
Friday, January 30 2009 - 05:59 AM WIB
JOGJAKARTA LIQUID IRON PROJECT (Indo Mines: 70%)
Jogjakarta, Indonesia
Contract of Works
On 4th November 2008 the Company received a Government approved Contract of Works to develop its Jogjakarta Liquid Iron Project. This Mining License is the highest level of approval required for development of the Project, and provides long-term security of tenure. This is a major milestone and step towards production for Indo Mines and the Project has the potential to become one of the lowest cost liquid iron producers in the world.
The Contract of Works is the first of its type to be granted to an international company in more than ten years, and the first ever to be granted in Java. It is a binding agreement with the Government of Indonesia and is protected by International law.
$5 Million Funding
The Company has executed a term sheet with Anglo Pacific Group PLC for an A$5 million (US$3.25 million) financing facility. The funds from this facility will be used for:
- Continuation of the Feasibility Study works, including environmental and social studies, metallurgical testing, infrastructure planning and marketing research.
- Acquisition of additional iron sands properties.
- Securing a coal supply through either an off-take agreement or outright acquisition of a resource.
The Conversion Price for the A$5 million facility is A$0.50 per share and carries a coupon of 8% per annum, payable quarterly in arrears. The coupon is payable via the issue of Indo Mines ordinary shares, based on a 10% discount to the 30 day volume weighted average price, or by cash at the discretion of Indo Mines.
The facility will be provided under the following conditions:
- Indo Mines has agreed to grant a 2% net smelter royalty over its attributable portion of the liquid iron or iron sand concentrate sales produced through the Jogjakarta Liquid Iron plant until the facility has been repaid, following which the royalty will reduce to 1%;
- repayment of this facility is only through payment of the royalty with the loan principle to be reduced by the royalty payments;
- a coupon rate of 8.0% is payable on the reducing outstanding principle each year;
- security is to be provided by registration of the Company?s interest in the Indonesian subsidiary;
- a right will be granted to convert any outstanding principle to shares at 50 cents per share at the discretion of Anglo Pacific Group;
- if the principle is converted to shares, the royalty arrangement ceases;
- the facility will be subject to due diligence being conducted by Anglo Pacific Group PLC; and
- the facility will be subject to shareholder approval where appropriate.
The facility included provision for an A$500,000 advance (US$325,000), subject to normal commercial conditions, which has enabled Undo Mines to continue with its Feasibility Study program.
Final drawdown under the remainder of the facility is subject to a range of conditions precedent including completion of definitive documentation and due diligence by Anglo Pacific Group PLC. Documentation is well advanced and is expected to be finalised in Q1 2009.
Environmental and Social Studies
URS Australia is continuing with the environmental and social impact studies for the Feasibility Study, including the AMDAL study that is required by the Indonesian Government to gain project approval. The environmental and social studies are due for completion in 2009.
Land Acquisition
On completion of the $5 million fund raising, the Company will pursue additional land with a target of a three to five fold increase in potential tonnage across its iron sands tenements. The Company hopes to expand its resource base with a view to increasing overall output through the construction of additional plants. (end of edited excerpt)