Release: Indo Mines: Scoping study confirms economic and cash flow potential of Jogjakarta project
Thursday, May 3 2007 - 01:06 AM WIB
The Board of Indo Mines Limited (“Indo Mines”) is pleased to advise that a Scoping Study undertaken by ProMet Engineers Pty Ltd has confirmed the economic viability and cash flow potential of the Jogjakarta Iron Sands Project (Project) in Central Java, Indonesia.
The Scoping Study shows an NPV ranging from US$418 million (A$505 million) to US$668 million (A$795 million) assuming sales at US$300 to US$350 per tonne for pig iron respectively from the production of 1 million tonnes per annum of pig iron.
Summary
At a mining rate of 9 million tonnes of iron sands per annum the Project will support a production rate of 1 million tonnes of Pig Iron per annum at an operating cost of US$152 per tonna At a spot price of US$300 (current spot prices range from US$280 - US$385) the Project has the potential to generate operating cash flows of around US$148 million per annum. Pig iron demand and supply projections within Indonesia and its adjacent markets indicate a stable price will continue for some years, with demand likely to increase with the availability of this cheaper domestic supply.
With a capital cost of US$582 million (determined to a nominal accuracy of ±30%) the project shows an IRR of 21.7% with an NPV (at a 10% discount rate) in excess of US$418 million, at US$350 per tonne the NPV rises to US$658 million.
The Scoping Study has identified several more cost effective options for developing the Project, Including the production of marketable concentrates and three alternative hot metal processing technologies that have the potential to significantly improve the economics of the project.
As part of the Scoping Study, URS Australia has completed an Environmental and Social Scoping Study that identified no unmanageable community or environmental issues with the development of the project at this stage, based on the preliminary work. URS indicated that there was potential for the land reclamation processes to see improved productivity of the mined out areas compared to the existing land form, arid the proposed waste stream management would assist in minimising the project’s environmental impact.
Based on these encouraging results, Indo Mines will now commence a Bankable Feasibility Study for a 1 Million tonne per annum Concentrate Plant due for completion late in 2007. At the same time a Pre-Feasibility Study will be commissioned to determine the most viable and cost effective hot metal processing technology for the Project, the results of this should be available for inclusion In the Bankable Feasibility Study by September 2007. The Bankable Feasibility Study for the 1 million tonne per annum pig iron plant is due for completion in mid 2008. (end of release)