Stratos acquires significant stake in Belitung Island tin project

By Ruli Setiawan

ASX-listed Stratos Resources Ltd said that binding legal documentation, subject to ASX and shareholder approvals (if required), has been executed under which a 60 percent shareholding interest in 11 highly prospective tenements on Belitung Island will be acquired by a Singapore joint venture company owned 50 percent each by Stratos and the Metalcorp Group.

Belitung Island has a long mining history and culture and is where Billiton Plc first commenced mining in the 1800s. Belitung and its neighboring island, Bangka are the two key tin production regions in Indonesia, the largest exporter of tin globally.

Stratos said in a statement received Tuesday that the tenements are production IUP?s that allow for mining and processing of tin. The tenements include historical artisanal workings (demonstrating both alluvial and hard rock tin potential).

The company further provides the following information.

The tenements exhibit excellent geological potential. Sampling during Stratos? due diligence includes various rock chip samples ranging up to 8.3 percent Sn (average 3.2%). There has been drilling and exploration work undertaken on the tenements historically and the acquisition includes the intellectual property related to this exploration.

Stratos intends to undertake a review of existing data, immediately followed by its own testing of prospective areas. Work undertaken by Stratos will be focused on identifying areas suitable for production in the short term, and to delineate a resource and reserve suitable for reporting under the JORC code. Initial exploration will be in alluvial areas with a view to examining hard rock potential once in production.

The 60 percent shareholding investment will be held by a Singapore based joint venture vehicle owned on an equal basis by Stratos and Metalcorp Group, European based global commodities trader. A subsidiary of the Metalcorp Group, Tennant Metals, has been involved in the marketing and sales of tin product from Belitung Island for many years and is a major participant in the Asian market for tin. The remaining 40 percent shareholding is currently held by a local partner with long mining and processing experience on the island.

The Metalcorp Group has agreed to provide an off-take agreement for 100 percent of the tin produced from the eleven (11) tenements and up to US$5.00 million of trade finance. These arrangements are to be at market rates and are subject to final terms and conditions and definitive documentation.

Consideration to be paid by Stratos is to be all scrip, with shares to the value of $400,000 at VWAP to be issued to the vendor. These shares will be subject to a voluntary one (1) year escrow. The transaction is subject to ASX and shareholder approval (if required).

Discussions in relation to the potential acquisition of the Yinchen smelter assets also continue with relevant Indonesian and other interested parties. In the interim, smelting arrangements at market rates are available from one of the other smelters on Belitung Island.

Editing by Reiner Simanjuntak