Mitrais Mining Newsletter

PT Aneka Tambang Tbk (ANTAM; IDX: ANTM; ASX: ATM) is pleased to announce the improvement of the Company’s S&P Global corporate credit rating in 2021 from “B/outlook stable” to “B+/outlook stable”, inline with the growth of the production and sales achievement of the Company’s main commodity and sustainability in the Company’s downstream development, as reflected in the growth of the Company’s solid financial performance. The Company’s rating improvement is supported by the outlook of the nickel ore production and sales performance in the domestic market and ANTAM’s ability to manage the Company’s liquidity.

ANTAM is targeting a positive growth in its operating and financial performance in 2021. During the first quarter of 2021 (1Q21), ANTAM recorded solid performance, which was reflected from its Earning Before Interest, Taxes, Depreciation and Amortization (EBITDA) in 1Q21 of Rp1.24 trillion. EBITDA performance in 1Q21 substantially increased compared to EBITDA from the first quarter of 2020 (1Q20) of Rp34.13 billion. The growth of ANTAM’s profitability in 1Q21 was reflected in ANTAM’s gross profit of Rp1.63 trillion, an increase of 189% from gross profit in 1Q20 amounting to Rp561.82 billion. Meanwhile, ANTAM’s operating profit in 1Q21 was recorded at Rp793.89 billion, significantly increased by 477% from the operating profit in 1Q20 of Rp137.54 billion. The solid improvement of gross and operating profits gave support to ANTAM’s net profit in 1Q21 amounting to Rp630.38 billion, significantly increased compared to loss profit in 1Q20 of Rp281.84 billion.

The Company retains its positive performance growth through the implementation of proper health protocols with high consistency in the midst of Covid-19 pandemic. In addition, increased product added value, optimization of production & sales, and implementation of appropriate and efficient cost management contributed to the Company’s positive performance growth.

In 2021, ANTAM targets significant operational performance growth on the Company’s main commodities production and sales in ferronickel, gold, nickel ore, bauxite and alumina through the optimization of mining production and plant utilization as well as expanding ANTAM’s commodity marketing channel. ANTAM has a commitment to seek and evaluate existing and potential future opportunities in line with the effort of Company’s sustainable growth and commitment to maximize shareholders and stakeholders value.

PT Harum Energy Tbk (HRUM) invested additional capital in Nickel Mines Limited (NML), a nickel mining company listed on Australia Stock Exchange. Ray A Gunara, the President Director of Harum Energy, announced this news in the information disclosure, quoted Monday (17/5).

It was specified that the additional capital investment was carried out by purchasing 51.256.292 shares of NML, which amounted to AUD 45.03 million, last weekend (12/5). Along with this transaction, the ownership portion of HRUM in NML grew to 6.737% of its entire issued and paid-up capital.

In the company’s financial report in Q1 2021, HRUM was reported buying 118.177.219 shares of NML in 2020 for AUD 76.28 million. The total purchase was equal to 4.70% equity of NML.

State-owned mining holding firm MIND ID is scouring the globe for lithium, the key ingredient Indonesia needs to realize its plan of mass-producing electric vehicle (EV) batteries.

MIND ID president director Orias Petrus Moedak said on Friday that the company had been in talks with potential lithium suppliers in Peru, Canada, Jordan, Laos, Australia, Morocco, Senegal and Malawi, among other countries.

“[The search] is still in its early stages. We are only going to start sending people once the COVID-19 [pandemic] is over. In the early stages, we will just use Zoom,” he said in a virtual press conference.

He added that the Foreign Ministry, through its network of ambassadors, was helping to connect MIND ID with potential suppliers.

Lithium is a key ingredient in the production of lithium-ion EV batteries, including in the nickel manganese cobalt (NMC) and nickel cobalt aluminum (NCA) variants that Indonesia plans to mass-produce in capturing a growing global EV market.

To that end, MIND ID and three other state-owned enterprises launched the Indonesia Battery Corporation (IBC) in late March. The mining holding owns 25 percent of the IBC, while its subsidiary, diversified miner PT Aneka Tambang (Antam), owns another 25 percent.

MIND ID previously acknowledged that lithium was a critically lacking metal and, therefore, planned to either acquire lithium mines abroad or import lithium.

According to the 2020 United States Geological Survey, Australia and Chile are the world’s top two lithium producers as they accounted for 77.9 percent of the world’s total 77,000-ton output in 2019. Indonesia does not produce lithium at the moment.

Orias also said on Friday that subsidiary tin miner PT Timah was looking for lithium reserves within Indonesia, but separately, Timah corporate secretary Abullah Umar declined to comment on the matter.

“At the moment, for domestic deposits, we are making sure that the [lithium] is really there. It can be found in unexpected places,” Orias said.

Meanwhile, Indonesian Mining Institute (IMI) chairman Irwandy Arif told The Jakarta Post on Monday that lithium had been detected in geothermal brines, oilfield brines and granite pegmatites in Sumatra, Sulawesi, West Kalimantan and the Bird’s Head Peninsula, West Papua.

However, “there is no quantitative data on Indonesia’s lithium potential at the moment”.

China’s Lygend Mining said on Wednesday its nickel and cobalt smelting project in Indonesia had made its first batch of mixed hydroxide precipitate (MHP), becoming the first high-pressure acid leach (HPAL) project in the country to reach production.

The $1.05-billion project on Obi island in the province of North Maluku is among several cobalt-nickel HPAL plants in nickel miner Indonesia that are under the spotlight as a source of supply for the burgeoning electric-vehicle battery sector.

“Our first batch of nickel and cobalt hydroxide products will be shipped to China soon, and gradually enter the global market,” said Lygend’s president Jiang Xinfang.

Jiang said that Lygend Resources and its Indonesian partner Harita Group plan to build other projects on Obi island to make nickel sulphate, precursors and stainless steel-related products.

“It means that there is a viable path to produce battery grade nickel with a reasonably low capital cost and a relatively short project timeline,” said independent consultant Steven Brown.

“With the nickel market already in surplus, we can expect the nickel price to drop if the commissioning process continues at this pace,” Brown added.

Lygend has been able to tap Chinese contractor Enfi Engineering Corp, which has experience in HPAL in Papua New Guinea, to design its project and benefit from relatively low-cost labour and nickel ore costs in Indonesia.

Lygend aims to reach first-phase annual capacity of 30,000-37,000 tonnes of MHP in the second half of 2021.

A flurry of HPAL projects, all involving Chinese companies, were announced a few years ago in Indonesia and raised eyebrows with their low cost estimates and short time frames.

The pandemic slowed their progress, with Lygend’s project delayed for nine months and only starting trial production last month.

Another HPAL project by GEM Co at the weekend shipped its core equipment to the island of Sulawesi from China and is aiming to start operating in early 2022.

That project, whose shareholders also include Tsingshan Holding Group and Japan’s Hanwa, had originally targeted first production in 2019.

Three-month nickel price on the London Metal Exchange fell 1.1% to $17,780 a tonne at 0904 GMT. Research house Antaike forecast an average nickel price in 2021 at $16,500 a tonne.

ASX-listed Indonesia gold explorer, Sihayo Gold has generated encouraging early gold assays from a diamond drilling program at one of several brownfield prospects at its namesake project in North Sumatra. Notable intersections from nine drill holes completed at the Sihayo-2 prospect were 24.8 metres grading an average 1.09 grams per tonne gold from 52m including 6m going 2.46 g/t, and 8m at 1.32 g/t from 96m including 1m at 4.4 g/t.

The Brisbane-based company, which has 20 holes totalling 2,000m planned for Sihayo-2 in the current initial round of drilling, is looking to define economic satellite gold resources within trucking distance of its planned Sihayo mining and processing “starter project”.

The proposed development is currently based on the advanced Sihayo-1 and Sambung sedimentary rock-hosted disseminated gold deposits, which host latest stated proved and probable reserves totalling 12.5 million tonnes grading 2.1 g/t gold for 840,000 ounces of contained gold.

Combined measured, indicated and inferred mineral resources for the two deposits including the ore reserves are put at 24 million tonnes at an average 2 g/t for 1.5 million ounces of gold.

Prime exploration targets at this stage – Sihayo-1, Sambung, Hutabargot Julu, Sihayo-2 and Sihayo-3, 4 and 5 – occur within two subparallel mineralised trends identified by prior exploration work.

Sihayo-2 lies on the interpreted north-west extension 500m-1000m from the main Sihayo-1 gold deposit.

Management says the prospect features a strong concentration of jasperoid boulders and outcrops located along a narrow north-west-south-east oriented ridgeline.

Untested gold soil and coincident IP chargeability anomalies encountered in historic exploration work programs add to Sihayo-2’s prospectivity.

The need to drill with man-portable rigs in mountainous jungle means the current program at Sihayo-2 will take another two months to finish.

Elevations at the project site range from about 985m to 1,300m above sea level.

Sihayo Gold tabled a bumper definitive feasibility study on its proposed namesake mining and processing starter venture almost a year ago headlined by impressive projected EBITDA of US$744 million or an average US$93 million a year across an initial eight-year life of mine.

The DFS base-case envisages the mine producing 635,000 ounces of gold or an average of 79,375 ounces per annum.

All-in sustaining costs were predicted to come in at an attractive average of US$709 per ounce.

The pre-production capital cost was forecast at US$144 million with payback of initial development capital pegged at only 25 months.

Sihayo Gold has indicated previously it hopes to progress early capital works at the Sihayo project including building site access roads and bridges in the forested terrain of the Barisan Mountains, final permitting approvals and detailed mine and tailings storage design this year.

PT Merdeka Copper Gold Tbk (MDKA) posted a current loss of US$ 6.34 million in the first quarter of 2021 compared to the same period in 2020 with a profit of US$ 14.11 million. The loss was due to the drop in operating revenue by more than 50%.

In the first quarter of 2021 Financial Report published on Wednesday (19/5), Tri Boewono, President Director of PT Merdeka Copper Gold Tbk (MDKA) said that operating revenue was US$ 46.54 million, down from US$ 103.78 million. The gross loss was US$ 2.22 million, decreased to the gross profit of US$ 34.21 million because the cost of revenue was higher than revenue.

The decline in revenue came from the export sales segment, while the domestic market increased from last year. Revenue from exports was recorded at US$ 40.09 million from US$ 108 million and domestic at US$ 5.98 million, up from US$ 1.09 million.

The contribution from MDKA customers last year reached US$ 96.38 million, down to US$ 39.68 million. The company’s third party customers include Precious Metals Global Markets (HSBC), Mitsui & Co Ltd, and PT Karya Sumiden Indonesia.

Gold prices have been trending up again and Nusantara is poised to capitalise on that with its low-cost gold project in a world-class mining jurisdiction.

The precious metal has recovered from its March lows in the US$1,670s an ounce range to current prices over US$1,850 an ounce, with The Felder Report noting that the outlook remained bullish as US inflation has risen much faster than interest rates.

Likewise, Kitco News quoted analysts as saying that gold is in a sweet spot as more investors look for an inflation hedge. TD Securities head of commodity strategy Bart Melek added that there is enough spare capacity in the global economy to accommodate this new bull-market cycle.

This is all music to the ears of Nusantara Resources (ASX:NUS), which has a gold inventory of 2.28Moz across its Awak Mas project in Indonesia.

Most of this is concentrated around the Awak Mas deposit where recent closed spaced drilling has defined a 2.2 million tonne (Mt) measured resource grading 1.58 grams per tonne (g/t) gold for 110,000oz of contained gold.

This diamond drilling has also upgraded the average grade of the indicated resource by 4 per cent to 36.5Mt at 1.41g/t gold.

Indicated resources typically have enough information on geology and grade continuity to support mine planning while measured resources represent an even higher level of confidence.

And there’s more to come. Assays are still to come from the satellite Salu Bulo deposit before the company provides a further update of its current resource that will in turn form the basis for an updated Ore Reserve estimate for the project along with an updated mine design and schedule.

Low cost gold project

Awak Mas already has a lot going for it.

The project currently has an estimated life of mine of 16 years and a low all-in-sustaining cost of just US$875/oz, which puts it squarely in the bottom half of the cost curve and ensures that it should be profitable at any point throughout the commodity price cycle.

This is due in part to a combination of open pit mining as well as conventional gravity and carbon-in-leach processing.

After-tax net present value and internal rate of return – both measures of a project’s profitability – have also been estimated at US$517m and 45 per cent respectively at an assumed gold price of US$1,700/oz.

This is likely to be improved further based on current high gold prices and positive outlook.

To top it off, historical exploration at Awak Mas has been focused around known mineralisation with very limited regional work carried out despite numerous occurrences of gold anomalism.

Still undervalued?

Despite Indonesia being ranked as a low-risk jurisdiction based on its score of 3.9 in the Marsh Country Economic Risk Ratings (scored out of 10 with higher ratings meaning higher risk), ASX investors appear to have discounted miners operating in the country.

Nusantara is a clear example of this “Indonesia Discount” with the company having an Enterprise Value to Resource (EV/Resources) ratio of about $31 per ounce of gold.

This compares with Capricorn Metals (ASX:CMM) with a EV/Resources ratio of almost $300 per ounce of gold and Emerald Resources (ASX:EMR) with $392.5 per ounce of gold.

EV/Resource divides the value of the business by the total volume of the resources it holds in the ground and is commonly used by investors to value mining projects.

Here it clearly highlights the discount that investors have attributed to Nusantara’s value despite its location in a low-risk country that also happens to be the world’s 11th largest gold producer with the 4th largest reserves.

Indonesia has also introduced policy changes aimed at further improving its attractiveness for miners with the latest omnibus bill designed to cut red tape and streamline the mine licensing process while providing incentives to miners for investing into downstream value-adding processes.

Despite this, the local partner and major shareholder Indika is set to highlight its confidence in Nusantara by proceeding with its second stage investment of US$25m for a further 15 per cent stake in the project.

PT Bumi Resources Tbk. (BUMI) posted a loss for the current year of US$ 338.0 million in line with a 21% decrease in revenue to US$ 3,680.8 million. This performance reversed compared to 2019 which recorded a profit of US$ 6.8 million.

Based on financial data presented in an information disclosure on the Indonesia Stock Exchange on Tuesday (18/5/2021), the coal mining company further revealed that the decline in sales prices by 14% and lower sales volumes by 7% had an impact on lower revenue which was only US$ 3,680.8 million, down 21% from US$ 4,653.7 million recorded in 2019.

In line with the decline in sales, the cost of goods sold also decreased by 19% to US$ 4,003.7 million. So that the company posted a gross profit of US$ 435.6 million vs US$ 649.9 million, a decrease of 33%.

Even though the company managed to control costs tightly and keep production close to normal levels, the company still could not withstand the sharp decline in profit before tax which fell by 174%, BUMI posted profit before tax of US$ 260.7 million.

In the end, BUMI in 2020 booked a loss for the current period attributable to the owners of the parent entity of US$ 338.0 million, while in 2019 it still experienced a profit of US$ 6.8 million.

Appointment of Daryl Corp to the Sihayo Board of Directors

Sihayo Gold Limited (ASX:SIH) (“Sihayo” or “the Company”) is pleased to announce the appointment of Mr. Daryl Corp to the Sihayo Board of Directors, effective from 1 June 2021.

Mr. Corp is a senior mining executive with over 40 years’ experience in the minerals industry in a wide range of both corporate and operational roles. This has involved base metals, iron ore and precious metals projects and operations, both in Australia and offshore.

Mr. Corp commenced his career as a graduate mining engineer in Broken Hill before moving to a role as Senior Mining Engineer with a small gold and base metals company. In mid-1990 he joined Newcrest Mining Limited progressing from technical roles to more senior roles where he developed broader corporate skills.

Mr. Corp held a range of positions at Newcrest including Transformation Executive – Business Development, General Manager – Executive Committee Co-ordination and Projects, Head of Ore Reserves Governance, General Manager – Corporate Affairs, and Manager – Business Development.

Mr. Corp managed feasibility studies for several underground gold mine developments as well as initial studies for both the Cadia Hill and Ridgeway mines. Mr. Corp was responsible for delivering permits required for development of the Gosowong Gold Mine in Indonesia, remaining with the project as Project Manager – Mining during the construction and early
operations at Gosowong.

Mr. Corp holds a Bachelor of Engineering in Mining from the University of Melbourne and a Diploma in Geoscience from Macquarie University. Mr. Corp is a Member of The Australasian Institute of Mining and Metallurgy.

Executive Chairman Colin Moorhead said, “We are pleased to welcome Mr. Corp to Sihayo Gold. Daryl brings a wealth of relevant industry skills and experience to the board and will add enormously to our team as we explore and develop gold deposits in our Contract of Work”.

ANTAM Appoints Mr. Yulan Kustiyan as Senior Vice President (SVP) Corporate Secretary

PT Aneka Tambang Tbk (ANTAM; IDX: ANTM; ASX: ATM) is pleased to announce the appointment of Mr. Yulan Kustiyan as the Company’s Senior Vice President (SVP) Corporate Secretary effective as of May 1, 2021, replacing Mr. Kunto Hendrapawoko.

Mr. Yulan Kustiyan previously held several key position in ANTAM as Vice President General Affairs and External Relations in 2018 until 2020 and Vice President Legal & Compliance in 2020 until 2021.

Febriany, New CEO of PT Vale Indonesia, Reinforces Commitment to Decarbonization

Febriany Eddy, newly appointed chief executive officer (CEO) and president director of nickel matte producer PT Vale Indonesia Tbk (PT Vale), has restated her commitment to low-carbon mining practices to pave the way for sustainability.

“We have to place an environmental base as a priority in our operations. This means that we have to minimize the impact of mining operations in Bahodopi, Pomala and Sorowako on the environment,” said the 44-year-old in her virtual speech following her inauguration as new CEO and president director of PT Vale in Jakarta.

She went on to say, “PT Vale is committed to reducing carbon emissions by 2030 before achieving neutral carbon by 2050.”

Febriany became CEO and president director of PT Vale, replacing Nicolas D Kanter after nine years, following the approval of her appointment by shareholders in a virtual general shareholder meeting (e-RUPS) on April 29.

Nicolas is now a commissioner of the company.

Febriany reiterated her commitment to leading PT Vale in carrying out the development agenda in Bahodopi, Pomala and Sorowako.

“This is driven by PT Vale’s purpose of making a contributions to society as a whole and bringing prosperity for all,” she said.

Regardless of the incredible challenges, “we are committed to becoming carbon neutral in nickel production, a crucial factor in the global decarbonation plan,” she remarked.

As part of the low-carbon initiatives, PT Vale has laid out a plan to replace coal in the production process with natural gas (LPG) and “although using gas can reduce half of the carbon emissions resulting from our nickel production activities, we will explore the use of other clean energy sources,” she says.

She acknowledged that it was a great challenge to realize the incredible ambition but “I am confident that with the strong commitment shared by the board of directors, board of commissioners and shareholders, we can realize this ambition.”

PT Vale’s chief commissioner Mark James Travers said from Canada that the decarbonization of the economy was a global issue and “it is very critical to improve the environmental performance.”

“Fortunately, PT Vale has been involved in low carbonization plans in nickel production by using natural gas to fuel nickel plants, replacing coal. With the full dedication of Febriany, this decarbonization can be more intensified,” he said.

“The most important thing is having a strong commitment to low carbon and we continue to stick to this commitment,” he added.

“Febriany is one who 100 percent supports this policy. I’ve known her for a long time and she was the first person who raised the issue for improvement when it came to environmental performance, particularly decarbonization,” he pointed out.

Febriany has carved out a great career for herself at Vale over almost 14 years, 11 of which have been at PT Vale.

Professionally, the mother of two, who was born in Palembang, South Sumatra, has international working experience in the financial and mining sectors for almost 22 years.

Prior to joining Vale, she worked for Pricewaterhouse Coopers in Jakarta for 5.5 years and in Amsterdam, Netherlands for a year and a half.

She served as manager of project financing supervision and financial evaluation at PT Vale for three years and was once assigned to work for Vale Base Metal Asia Pacific and Africa based in Brisbane, Australia, for 2.5 years. Her responsibilities covered Vale Base Metals’ operations in Indonesia, Japan, China, Taiwan and Africa.

Upon returning to Indonesia, she held the position as CFO of PT Vale from 2018 to 2019 and served as deputy CEO for two years before eventually being appointed as CEO.

Febriany holds a bachelor’s degree from the University of Indonesia an MBA from UCCLA Anderson School of Management and from the National University of Singapore.

According to an S&P Global Ratings report, only 13.2 percent of C-suite executive roles are held by women.

This has led to Febriany being named one of the Top Most Influential Women in Treasury in Asia Pacific (2015), as one of the few women in the world that held this most strategic position in the mining industry.

Febriany, who was elected as Asia’s Top Sustainability Superwomen 2019, is also active in voicing gender equality, pluralism, inclusion and sustainability concerns through various forums, such as Women in Mining & Energy (WIME), the Indonesia Business Coalition for Women Empowerment (IBCWE), and currently serves as vice chairman of the Indonesia Business Council for Sustainable Development (IBCSD).

Her love of Indonesia’s nature has driven her to enthusiastically engage in her hobby of diving and promoting sustainability as her personal mission.