Release: AKD Limited steps up to Indonesian pig iron project with capital raising
Monday, November 21 2005 - 05:30 AM WIB
The project received major impetus this month with the announcement that international metals group, Outokumpu, and Krakatau Steel of Indonesia, had signed a memorandum of understanding on development of the pig iron plant.
The Perth-based AKD will use the funds from the capital raising to complete a drilling program to bring the Yogyakarta Ironsands Project to JORC compliant status. It will also commence a feasibility study on the proposed project that would have a design capacity of at least 300,000 tonnes of pig iron per year.
Completion of both tasks would see AKD earn a 70% stake in the pig iron development, which is located in Yogyakarta Province, Java, under an existing agreement with current owners, PT Jogja Magasa Mining and Nusantara Energy Limited.
AKD Managing Director, Mr Zlad Sas, said the $2.2 million capital raising represented a milestone for the Company, which was listed on the Australian Stock Exchange in 1993 as a diamond explorer.
?We have an excellent opportunity to become the majority owner of an ironsands - pig iron project at a time when Indonesia?s steel demand is growing strongly,? Mr Sas said.
?Outokumpu Technology Australasia will be carrying out a review of all technical and engineering parameters regarding mineral processing, plant design and infrastructure aspects for the project that will use similar technology to that operated by Bluescope Steel in New Zealand,? he said.
Capital raising
AKD Limited will issue up to 14.7 million shares at 15 cents a share ? a price that will be in line with recent ASX trading after a proposed one-for-ten capital consolidation is completed.
The prospectus is scheduled to close on 16 December 2005.
After completion of the capital consolidation and the fund raising, AKD will have 50 million shares on issue.
New profile
Mr Sas said shareholders would be asked at the Annual General Meeting on 29 November to approve the commercial transaction allowing AKD to earn its right in the Project and to approve a number of measures to reflect the new phase in the Company?s development and its focus on Indonesia.
These measures include:
? Changing the company?s name from AKD to Indo Mines Limited,
? Consolidating the Company?s capital on a one-for-ten basis,
? Raising $2.2 million in working capital via a Prospectus, and
? Priority participation in the fund raising for existing shareholders.
Project details
In September, AKD commissioned consulting geologists Mackay & Schnellmann to investigate the prospectivity of the Yogyakarta ironsands deposit, locally known as the Kulon Progo ironsands deposit.
MacKay & Schnellmann revealed that the ironsands deposit is extensive in area, containing titaniferous magnetite over a 22 kilometre long by up to 1.8 kilometre wide strip of coastal plain near Yogyakarta. The deposit is remarkably uniform with depths of at least 10 metres from surface with surface grades around 13% iron.
AKD has initiated a preliminary study of the engineering, infrastructure and market components relating to the Ironsands ? Pig Iron Project. Once Outokumpu Technology has been commissioned to carry out the feasibility study on the project, a more detailed picture will emerge on the plant design and infrastructure.
Krakatau Steel of Indonesia, a State owned enterprise, intends to be an offtake partner for the pig iron produced from the project. Negotiations are currently underway between the parties on a draft offtake agreement that would provide the basis for guaranteed sale of a substantial portion of the pig iron production from Yogyakarta. (end of release)