MSC wins right to mine tin in Bangka Island

Malaysia Smelting Corp. Bhd. (MSC) has secured another right to explore and mine tin in Bangka Island, Indonesia, Business Times reported Tuesday.

It has entered into a joint cooperation agreement with Indonesian-based PT Mitra Stania Prima, the exploration and mining permits holder of mining districts in Bangka Island.

In 2002, the group acquired a 75 per cent stake in a tin mining and smelting company PT Koba Tin in Bangka Island, Indonesia.

The Indonesian operations currently contribute about 60 per cent to the group’s production.

MSC told the Kuala Lumpur Stock Exchange Monday that the joint cooperation agreement with PT Mitra will provide long-term sustainable tin production for the group.

An area measuring 4,039ha of the more prospective exploration and mining permit areas has been included for the purpose of the agreement. This includes 2,753ha under an exploration permit and 1,286ha under a mining permit.

An additional 11,292ha of prospective areas have also been identified for future exploitation under this agreement if required.

MSC said initial studies reveal there are good prospects for finding alluvial tin deposits in some of these permits to support a large-scale operation.

MSC has allocated US$1.76 million US$1 = RM3.80) for drilling and exploration programmes and other relevant technical investigations in 2004 and 2005.

The company will announce later on budget estimates for follow-up investigations and mine construction, if sufficient reserves are found.

The terms state that MSC bears all costs and expenses for exploration, feasibility studies, ensuing mine construction if the project is viable, and mining. It will also comply with all statutory reclamation and mine closure obligations.

At the same time, MSC has the right to assign the agreement to its Indonesian subsidiary company.

Subject to PT Mitra’s agreement, MSC can defer mine construction or suspend mining if tin prices and/or recovered grades are below the levels required for a profitable operation.

If this remains for six months, both parties shall discuss the future of the operation and endeavour to adjust the production sharing formula and other terms as may be necessary for a profitable operation.

With a total production in excess of 35,000 tonnes of tin metal per year, MSC contributes about 15 per cent to the world production.(*)