September 26, 2019
Hot on the heels of Mitrais’ recently signed partnership renewal with Datamine, one of Indonesia’s major thermal coal mines, PT Asmin Bara Bronang (ABB), has upped the ante by increasing their Datamine licensing through Mitrais by more than 30%.
PT Asmin Bara Bronang (ABB) is a bituminous thermal coal mine located 50 kilometres west of Muara Teweh in Central Kalimantan. It is a 3rd generation Coal Contract of Work holder in Central Kalimantan Province, Indonesia, with a concession area spread aross two regencies of Central Kalimantan Province. It has a total retained mining area of 24,980 hectares consisting of three mining blocks (Block Mamput, Block Bekanon and Block Merangun). The mine is majority owned and operated by United Tractors via its 100% owned subsidiary, PT Tuah Turangga Agung.
Already an established user of the Minescape suite of products through it’s association with Mitrais, Asmin management took the opportunity to further leverage the benefits they have seen from the suite’s use in their operation to significantly increase their licensing.
MineScape is a suite of integrated solutions for coal and metalliferous deposit open-cut and underground mining operation. It delivers extensive geologic modelling and mine-design functionality. By automating mine planning and geologic modelling, MineScape provides:
• Optimal efficiency in mine planning operations
• Streamlined engineering processes
• Improved productivity
• Lower mining costs through smarter use of technology and information management systems
• Increased profit potential
MineScape is fully integrated and provides multi-user access to a single database in a network environment. It performs a specific range of data processing and mine planning functions and is exceptionally easy to use.
Mitrais has been selling and supporting MineScape in Indonesia and ASEAN for 28 years, so we feel privileged that Datamine have renewed our agreement and look forward to providing value to them and our esteemed clients like Asmin.
This is a perfect example of a great partnership between Minescape, Asmin and Mitrais, and is exactly the sort of partnership that Mitrais is keen to foster with other customers. Congratulations to all on a great result.
Source : Mitrais News
September 26, 2019
The World Bank’s Board of Executive Directors today approved a $150 million loan for Indonesia to scale up investments in geothermal energy by reducing the risks of early-stage exploration. The loan is accompanied by $127.5 million in grants from the Green Climate Fund and the Clean Technology Fund, two institutions supporting climate-friendly development.
Geothermal energy is expected to play a significant role in reducing Indonesia’s greenhouse gas emissions. As a clean and renewable energy source that provides power continuously, geothermal can reduce the country’s dependence on coal-fired power and other fossil fuels. If geothermal resources can be accessed easily, costs are competitive with coal and natural gas.
“Indonesia’s geothermal sector has vast potential and our current installed geothermal power capacity is already the second largest in the world. Geothermal is environmentally sustainable and developing this sector is an integral part of Indonesia’s overall energy security, as well as making us less dependent on imported fuels. Therefore, the government of Indonesia has a strong commitment to encourage developers’ participation in exploring the geothermal potential and to provide support through this risk mitigation facility,” said Sri Mulyani Indrawati, Minister of Finance of the Republic of Indonesia.
Under the Indonesia Geothermal Resource Risk Mitigation (GREM) project, the financing will help public and private sector developers to mitigate risks in exploration of geothermal resources, including covering a part of the cost in case of unsuccessful exploration. The project will also finance technical assistance and capacity building of key stakeholders in the geothermal sector.
“To achieve the government’s target of 23% renewable energy mix by 2025 requires contributions from geothermal development of about 7% or equal to 7,000 MW. It is an ambitious and huge development with a total investment of $35 billion. Geothermal projects are risky investments especially at the exploration stage, and no financial institutions provide funding for this early stage. We are happy to welcome the GREM facility, dedicated to finance exploration activities and provides a risk sharing instrument. The project would help answer a big challenge in exploration financing and contribute to the success of Indonesia’s geothermal development,” said FX Sutijastoto, Director General of New, Renewable Energy, and Energy Conservation, of the Ministry of Energy and Mineral Resources.
The cost for exploration drilling is relatively small compared to the total cost of developing geothermal power. However, it is the riskiest phase and finding this initial capital has proven to be challenging for developers since they may not recover the cost if the drilling reveals that the geothermal resource is not economically viable.
Indonesia is currently a net importer of oil and continues to rely heavily on fossil fuels for power generation. Of the total installed national power capacity, 88% is sourced from fossil fuels while 12% comes from renewable energy. Indonesia now has 1.9 gigawatts of installed geothermal power and plans to develop an additional 4.6 gigawatts to help meet the government’s target of renewable energy.
“Financing for exploration drilling has been among the main barriers for geothermal expansion in Indonesia. Overcoming this hurdle will allow Indonesia to fully tap into the country’s large geothermal potential. The World Bank is committed to helping Indonesia achieve universal access to electricity as for a cornerstone for economic growth, job creation, and prosperity for the citizens of Indonesia,” said Rodrigo A. Chaves, World Bank Country Director for Indonesia and Timor-Leste.
The project is supported by the Green Climate Fund, Clean Technology Fund, Energy Sector Management Assistance Program, and Global Infrastructure Facility.
The World Bank’s support for sustainable energy is an important component of the World Bank Group’s Country Partnership Framework for Indonesia, which focuses on government priorities that have potentially transformational impact.
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September 23, 2019
Vancouver, British Columbia, East Asia Minerals Corporation (the “Company”) (EAS:TSX.V, EAIAF:OTCBB) is pleased to announce that further to the news release from September 13, 2019, East Asia Minerals subsidiary, PT. Tambang Mas Sangihe or “TMS” (the holder of the Sangihe CoW license) has had its detailed works program & business plan (DWP & BP) approved by Ministry of Energy and Mineral Resources at an open meeting attended by TMS and representatives of both Provincial and Central mines departments. The Ministry of Energy and Mineral Resources and provincial mines department representatives showed strong support and encouragement for the TMS project and confirmed their commitment to the development of the project.
To complete the license upgrade on our Sangihe project, to Operation Production status, the company must receive approval of the DWP & BP and the completion of the Environmental Impact Assessment meeting (AMDAL) which will authorize the issuance of the environmental permit.
In regard of the foregoing filings, the Company is not required to, nor will be filing a supporting technical report with the securities regulator within 45 days of the date of this news release. The Company also cautions readers that the any production decision made by the Company will not be based on a NI 43-101 feasibility study of mineral reserves that demonstrates economic and technical viability and as such, there may be involved increased uncertainty and various technological and economic risks outlined in the “forward looking statement” below.
Once the AMDAL meeting is held, the remaining open item necessary to have the Operation Production License issued, is the payment of a mining tax (Dead-rent). The license upgrade will enable the East Asia Minerals to begin construction of the gold production facilities and infrastructure for the Sangihe project.
The Sangihe gold-copper project is located on the island of Sangihe off the northern coast of Sulawesi and has an existing National Instrument 43-101 inferred mineral resource of 114,700 indicated and 105,000 inferred ounces of Gold as reported in the Company’s “Independent Technical Report on the Mineral Resource Estimates of the Binebase and Bawone Deposits, Sangihe Project, North Sulawesi, Indonesia” dated May 30, 2017 authored by Ian Taylor, BSc Hons, MAusIMM(CP), MAIG and Anthony Woodward, BSc Hons, M.Sc., MAusIMM, MAIG. Readers are cautioned that mineral resources that are not mineral reserves do not have demonstrated economic viability. The Company’s 70-percent interest in the Sangihe-mineral-tenement contract of work (“CoW”) is held through PT Tambang Mas Sangihe (PTTMS). The remaining 30-percent interest in PTTMS is held by three unaffiliated Indonesian corporations. The term of the Sangihe CoW agreement is for 30 years upon commencement of the production phase of the project.
Frank Rocca, BAppSc.(Geology), MAusIMM, MAIG, Chief Geologist of East Asia Minerals Corp. is the Qualified Person as defined under NI 43-101 who has reviewed and approves the content of this release.
On behalf of the Board of Directors of East Asia Minerals,
Chairman & CEO
September 22, 2019
Sand mining on the Sunda Strait near Anak Krakatau volcanic island has alarmed residents of Sebesi Island in South Lampung, as it has been deemed a danger to the local environment and fishermen, especially after an eruption and tsunami in December last year.
PT. Lautan Persada Indonesia (LIP) obtained a license to mine sand from the Lampung Investment Agency in 2015 near Sebesi Island and Anak Krakatau.
Sebesi islanders first noticed a mining ship on Aug.10, but they were not initially concerned, Sebesi resident Rahmatullah said.
The ship then appeared the next day, which worried residents, Rahmatullah added, and 10 days after that, representatives of the company, including its director, Stefan Gunter Tjang, visited the island to inform people that the company would begin mining sand in the area.
“As far as I know, no equipment should be used yet. Residents reject the plan,” Rahmatullah said.
Locals also tried to confront the mining ship and took footage of the alleged ship activities on Aug. 29.
“We were traumatized by the impact of the tsunami and after that we are being bothered by this,” Rohmatullah said.
He said sand mining could potentially destroy the local marine ecosystem, which Sebesi islanders relied on to earn a living.
“Like coastal erosion, coral reef destruction and a decrease in marine life can reduce a fishermen’s yield,” Rahmatullah said.
He said locals also feared that the mining could trigger landslides near Krakatau that could trigger another tsunami.
He said it was not the first time Sebesi islanders tried to stop planned mining activities in the area. In 2009, PT. ASKO tried to mine in the area and in 2014, PT. Pal tried to mine in the area as well.
Indonesian Forum for the Environment (Walhi) Lampung director Irfan Tri Musri said PT. LIP might have violated Law No. 1/2014 on coastal and small island spatial planning.
LIP’s license was issued in 2015, while the law was issued in January 2018. Between January 2014 and 2018 was a grace period, meaning that LIP’s license had no zoning plan basis, Irfan added.
“We view that the license was administratively unlawful when issued,” Irfan said on Thursday.
He said the Lampung administration should revoke the license and if the administration failed to do so, Walhi would consider pursuing the matter at the administrative court.
Irfan also said mining activities could also be a stepping stone to mining sand from Anak Krakatau.
He also said the area was supposed to be protected as a conservation area according to Law No. 5/1990 on natural resource and ecosystem conservation.
The Lampung Council held a meeting with Sebesi Island residents and Wahli Lampung on Sept. 10 to discuss LIP’s mining activities.
The council’s interim commission I head, Mingrum Gumay, said the council would form a working group to look into LIP’s activities and license.
Mingrum said that if the company was found to be polluting the environment, threatening local fishermen’s livelihood and violating the law, it would be reprimanded.
Agency for the Assessment and Application of Technology (BPPT) tsunami expert Widjo Kongko said sea sand mining could damage the environment and alter sea waves, which could lead to coastal erosion and sedimentation, but research had not suggested that mining could cause a tsunami, which the Sebesi islanders feared.
“I don’t think there is a correlation [between tsunamis and mining activities],” Widjo said.
“Tsunamis from undersea landslides are caused by volcanic eruptions or an earthquake,” he added.
September 23, 2019
Coal producer Geo Energy Resources has acquired a majority stake in two South Sumatra coal mines for US$25 million.
It will buy PT Titan Global Energy (TGE) from PT Titan Infra Energy (TIE) and its affiliate, PT Jaya Utama Indonesia (JUI), giving Geo Energy a 51 per cent stake in producing coal mines PT Bara Anugrah Sejahtera (BAS) and PT Banjarsari Pribumi (BP).
TIE was established in Indonesia in 2004 and is a vertical energy infrastructure and logistic companies with primary operations in South Sumatra, Indonesia.
Mainboard-listed Geo Energy will pay for the deal with its existing cash – US$2.5 million for a refundable deposit payable upon execution of the purchase agreement, and US$22.5 million once the deal is completed.
The deal must be completed by its long-stop date of Dec 31, 2019.
Both mines have been in production since 2012, and produced a total of 3.8 million tonnes of coal in 2018.
After completing the acquisition, Geo Energy wants to increase total production to five million to seven million tonnes a year.
The average strip ratio for both mines is estimated at a maximum seven times. The ratio refers to the volume of waste material required to be handled in order to extract a tonne of ore, with a lower ratio usually signalling better profitability.
BAS and BP have a contract with TIE to supply coal to PT Perusahaan Listrik Negara, a state-owned electricity company, to fulfil a 25 per cent domestic market obligation (DMO) requirement from an approved annual coal production plan.
BAS and BP’s DMO sales for the financial half year ended June 30, 2019 was 1.8 million tonnes.
Based on the proforma financial effects of the proposed purchase, Geo Energy said it expects to account a bargain purchase to its earnings.
The adjusted average cost of sales on the BAS and BP coal for H1 2019 was US$32.50 to US$33.60 per tonne against the current average of the Indonesian Coal Price Index for 5000 and 4200 GAR coal of US$39.43 per tonne on Sept 20, 2019.
Geo Energy said it expects the proposed acquisition to be positive and value accretive to the group.
The deal will increase its total proven coal reserves from 78 million tonnes to about 122 million tonnes as at June 30, 2019.
Coal prices have continued to show resilience, trading at a range of US$30.20 to US$40.40 per tonne between Jan 4, 2019 to Sept 20, 2019 for Indonesia’s Coal Price Index, said the company.
South Sumatra has abundant coal and is located in close proximity to key export markets such as India, China and South-east Asian countries, including Indonesian domestic markets, it added.
According to Indonesia’s Ministry of Energy and Mineral Resources, South Sumatra holds over 39 per cent of Indonesia’s coal reserves but accounts for less than 10 per cent of the country’s coal production in 2018.
Compared to Kalimantan coal, South Sumatra coal offers estimated freight and barging cost savings of US$5-10 per tonne to supply coal to power plants in West Java and Sumatra due to shorter hauling and shipping distance from the mine to the buyers’ destination, said the company.
“The proposed acquisition is in line with the company’s business strategy to expand its business operations and increase its coal reserves and production levels,” said Charles Melati, executive chairman of Geo Energy.
“Since the issuance of our US$300 million senior note in 2017, we have been actively looking an earnings accretive and in-production coal asset with ready infrastructure, right price and conditions.”
The firm had at the end of August submitted a revised non-binding proposal to acquire new coal assets for a producing coal mine in East Kalimantan, Indonesia.
Geo Energy shares closed flat at S$0.148 on Friday.
September 23, 2019
South Korea’s LG Chemical is considering building a facility to produce lithium batteries in Indonesia as a precautionary measure against the country’s plan to ban nickel ore exports from January 2020, a minister stated.
LG Chemical’s plan to build the facility in Indonesia is the positive effect of the ban on nickel ore exports, Coordinating Maritime Affairs Minister Luhut Binsar Pandjaitan noted in a written statement released on Monday.
“At a meeting with LG Chemical in Seoul some time ago, they said they were considering to develop a lithium battery production facility in Indonesia after learning about Indonesia’s plan to impose a ban on the export of nickel ore as of January 2020 and looking at the upward trend in nickel prices in the global market,” Pandjaitan remarked in Beijing on Sunday after attending the ASEAN-China Expo in Nanning, China.
However, LG Chemical has yet to arrive at a decision on its partner to develop the facility.
The South Korean company may join hands with a Chinese company or German car manufacturer Volkswagen that is presently into the development of electric cars, he stated.
Pandjaitan expressed belief that LG Chemical’s intention of setting up the facility in Indonesia will support the government’s plan to develop electric cars.
Raw material for the production of batteries for electric cars is nickel, with content of less than 1.4 percent, which is currently being exported.
“Electric car also uses aluminium and carbon steel for its chassis, machine, and the likes. As such, we hope tax revenues would increase and lead to the creation of more jobs,” he stated
During the course of his visit to the ASEAN-China Expo, Pandjaitan met with Deputy Chief of the National Development and Reform of China (NDRC) Ning Jizhe.
At the meeting, Jizhe drew attention to the fact that the ban on nickel ore exports will affect China that relies on Indonesia for 50-75 percent of its nickel requirements.
In return, Pandjaitan lodged Indonesia’s objection to the Chinese government’s policy to increase anti-dumping duties on stainless steel from Indonesia.
September 27, 2019
PT Merdeka Copper Gold Tbk (MDKA) will conduct a stock split with a ratio of 1:5 (from Rp 100 per share to Rp 20 per share). This corporate action plan was approved at the company’s Extraordinary General Meeting of Shareholders (EGMS) which took place yesterday (25/9).
As quoted from the disclosure of company information, the plan was agreed to by all meeting participants present representing 3,609,477,357 shares or 82.41% of all shares issued and fully paid.
In addition to the stock split decision, shareholders also decided an authorized capital of Rp 1.40 trillion divided into 70 billion shares, each valued at Rp 20 per share. Of this authorized capital, 21.89 billion shares with a total value of Rp 437.95 billion have been placed and paid to the company.
September 12, 2019
PT Aneka Tambang Tbk (ANTAM; IDX: ANTM; ASX: ATM) is pleased to announce its exploration report for August 2019 in accordance with the Indonesia Stock Exchange listing rules.
ANTAM’s exploration activities were focused on gold, nickel and bauxite in August 2019, with total preliminary cost of Rp 6.17 billion.
In August 2019 ANTAM conducted gold exploration activities in Pongkor, Cibaliung and inspection of prospective area. In Pongkor, ANTAM conducted geological modeling and drilling. Meanwhile in Cibaliung, ANTAM conducted geological mapping, geophysics and drilling test. Total gold exploration cost in August 2019 reached Rp3.74 billion (unaudited preliminary figure).
Nickel exploration activities were conducted in Pomalaa and Tapunopaka, Waylukum and inspection of prospective area. In Pomalaa and Tapunopaka and also Waylukum, ANTAM conducted geological mapping, core sampling, Core logging and single tube drilling. Total nickel exploration cost in August 2019 reached Rp1.71 billion (unaudited preliminary figure).
Bauxite exploration activities were conducted in Tayan and Mempawah, West Kalimantan and inspection of prospective area. In Tayan and Mempawah, ANTAM conducted geological mapping, test pit, grid measurement, geodetic GPS measurement and rock sampling. Total bauxite exploration cost in August 2019 reached Rp724.32 million (unaudited preliminary figure).
September 23, 2019
PT Bumi Resources Minerals Tbk (BRMS) plans to start production from its gold mine in Palu, Central Sulawesi in the fourth quarter of this year following a plant commissioning and production trial run.
The initial target for production capacity is 100,000 tons per year. This number will then be increased by 80% to 180,000 tons per year in 2020 with a mine life of 7 years.
Director and Investor Relations of BRMS, Herwin Hidayat conveyed that the estimated capital expenditure spent on the Palu project was around US$ 10-15 million.
According to him, the Palu project is also a company’s strategy to increase revenue. According to its financial statements, in the first semester (1H) of 2019, BRMS recorded a net income of US$ 2.96 million, 258.85% higher than the record from the same period last year of US$ 825,000.
BRMS has also managed to record a profit of US$ 932,697, while in 1H 2018, it recorded a net loss of US$ 10.72 million, Herwin was quoted as saying by Kontan.co.id, Friday (20/9).
September 23, 2019
PT Indika Energy Tbk (INDY) increased its ownership in Nusantara Resources Ltd through the Australian Stock Exchange (ASX). With the purchase of additional shares, the ownership of Indika shares in NUS reached 21.04%.
As quoted from the disclosure of company information, Adi Pramono, Corporate Secretary of PT Indika Energy Tbk (INDY) said the company bought 1,905,261 shares, equivalent to 1.14% of the total number of NUS shares. “This transaction is a strategic step to increase ownership in NUS as one of the business diversification strategies,” he said.
According to him, transactions with accumulated ownership of 1% or more must be reported according to the rules set by ASX
September 25, 2019
Indonesia’s nickel ore export ban in 2020 is unlikely to disrupt the Chinese stainless steel supply chain as mills can still source raw material from alternative routes.
The Chinese stainless steel industry currently relies heavily on nickel ore from Indonesia, the world’s largest producer, as feedstock for nickel pig iron (NPI), which has prompted speculation that the ban could have a severe impact on NPI supply in China.
Indonesia exported 20.72mn t of nickel ore and ferro-nickel last year. The majority of this, 19.9mn t, was delivered to China to feed the world’s largest stainless steel producer, trade data show.
But some market participants have questioned the extent of the impact that the nickel ore ban will have on Chinese access to NPI.
“We do not trust the story that NPI is short, it’s a story of some companies trying to push up prices. We heard NPI producers are very well-stocked, they have produced a bit in advance,” one Europe-based trader said.
A Shanghai-based ferro-nickel trader agreed: “There is not going to be much impact. The supply in the short term is adequate, and supply exceeds demand.”
In addition, the ore export ban could also speed up construction of nickel refineries in Indonesia.
According to Indonesia’s energy and mineral resources ministry, 11 nickel smelters have already been built and 25 are under construction.
“I do not see the impact of Indonesia’s ore ban being as bad — all these projects in Indonesia might ramp up faster than expected,” a second trader said.
When these smelters start production, they are likely to export the majority of their ferro-nickel and NPI output to China.
Additionally, two Chinese stainless steel producers have already set up operations in Indonesia.
Integrated Chinese-owned stainless steel producer Tsingshan operates a 3mn t/yr mill in Indonesia and also owns nickel and chrome mines in the country.
Fellow Chinese producer Delong Holdings’ Indonesian joint venture, Dexin Steel, also started operations in Indonesia this year.
As major Chinese firms shift their operations to Indonesia, NPI production in China is expected to fall in 2020. China produced 475,700t (nickel metal content) of NPI in 2018, according to data from nonferrous metals industry association CNIA, which forecasts NPI output this year at 500,000t.
Chinese NPI prices have been on the rise since Indonesia announced in early September that it will bring forward its nickel ore export ban by two years. Under the new policy, ore containing less than 1.7pc nickel will not be allowed to be exported from 1 January next year.
Argus’ price for 10pc NPI was assessed at Yn1,150-1,170/mtu on 24 September, up by 5.5pc from Yn1,080-1,120/mtu on 2 September.
Gains in the NPI price were mainly supported by higher nickel prices on the London Metal Exchange, where the three-month nickel contract hit a five-year high of $18,475/t on 2 September. Nickel prices have since fallen, settling at $17,030/t on 25 September, but continue to hover around five-year highs.
Alternative Supply Opens Up to China Stainless Producers
The world’s second-largest nickel ore producer, the Philippines, has also said it will increase exports to China to make up for the short-fall from Indonesia.
And if NPI supply to Chinese mills is impacted, Chinese stainless steel mills could also switch to using more nickel cathode.
Although LME on-warrant nickel stocks have dropped to the lowest level since 2008, at 58,602t on 25 September, invisible off-warrant stocks are sufficient to meet that demand, traders said.
Nickel is one of the key materials in stainless steel production and the industry accounts for about 70pc of global nickel consumption. It is also increasingly important for the battery industry — nickel is a key component in lithium-ion batteries for electric vehicles.
September 25, 2019
Indonesia’s ban on exports of unprocessed ores and minerals will result in reduced nickel ore trade, hurting the demand for small bulkers. However, with bauxite trade shifting to Guinea-China from Indonesia-China, large bulk carriers will gain employment.
The Indonesian government has decided to bring forward to early 2020 its plan to ban exports of nickel ore. Anticipating a shortage of nickel ore from 2020, Chinese stainless steel producers will speed up their inventory build-up, which will result in strong nickel ore trade on Indonesia-China until the end of 2019. However, in the long term, the ban will be detrimental for nickel ore trade as it will be difficult for Chinese consumers to find alternate sources of nickel ore.
For the moment, the Indonesian government has not announced any plans to bring forward a ban on bauxite exports but even if the government chooses to do so, the impact on overall trade will not be significant. It will be easy to replace Indonesia with Guinea sourced bauxite, though it will increase the average haulage length.
The Indonesian government had imposed a similar ban in 2014 before partially lifting it in 2017. In the run up to the proposed ban, Indonesia’s nickel ore exports skyrocketed and in 2H13 the country exported an additional about 10 million tonnes of nickel ore than in 2H12. This translated into a monthly increase of more than 1.5 million tonnes. If the present ban has a similar impact, Indonesia’s exports will increase by 6-7 million tonnes over the next four months.
China accounts for more than 96% of Indonesia’s exports, and we do not foresee any major change in trade patterns. As it takes about 20 days for a Handysize vessel to complete a round voyage between Indonesia and China, an increase in Indonesia’s exports before the ban will create additional demand for 30-35 more Handysizes over next four months.
However, by 2020 with practically no nickel ore moving from Indonesia, we estimate 40 Handysize vessels will lose employment – a trend that will continue in the long term.
Indonesia is the second largest exporter of nickel ore in the world, accounting for 37% of global nickel ore trade in 2018. After the ban is imposed, we believe it will be challenging for other major exporters such as the Philippines and New Caledonia to fill the huge void created by the ban. In 2014, when Indonesia imposed a similar ban, global nickel ore trade nosedived 34% and by a further 67% in 2015. But as all the other major suppliers of nickel ore are close to Indonesia, there was no significant change in terms of tonne-mile employment.
However, if the ban on bauxite exports is implemented it will have a major impact on tonne-mile employment. Indonesia exports most of its bauxite to China, and if Indonesia decides to ban bauxite exports from 2020, China will replace Indonesian bauxite with bauxite from Guinea. Already, production is being ramped- up at Guinea’s existing mines and new mining facilities are due on steam. For example, China’s Chalco will commence mining from its Boffa project by the end of 2019. At full production 12 million tonnes of bauxite will be mined annually at Boffa.
A shift in bauxite trade away from Indonesia to Guinea will increase average haul lengths on bauxite trades as the distance between Guinea and China is more than 10,800 nautical miles compared with only 2,300 nautical miles between Indonesia and China.
In 1H19, Indonesia exported seven million tonnes of bauxite to China, which resulted in 16 billion tonne-miles of shipping demand. However, a mere 1.5 million tonnes of trade between Guinea and China would be enough to generate the same level of demand.
The gainers here will primarily be large bulkers, as traders prefer Capesize and Kamsarmax vessels on the Guinea-China route, as opposed to Supramaxes and Handysizes on Indonesia-China.
September 25, 2019
Indonesia’s Directorate General of Renewable Energy and Energy Conservation has announced it will auction off the 5 MW Wapsalit geothermal working area in Malaku at the end of this month.
As reported this morning from Indonesia, the country’s Directorate General of Renewable Energy and Energy Conservation (EBTKE) Ministry of Energy and Mineral Resources (ESDM) will auction the Geothermal Preliminary and Exploration Survey (PSPE) Assignment area at the end of September this year. The PSPE area to be immediately auctioned is Wapsalit in Gorontalo, Maluku, with a potential electricity capacity of 5 MW.
ESDM Ministry’s Geothermal Director Ida Nuryatin Finahari said the auction was to pursue the realization of geothermal utilization in generation. The government was open to offers from any company interested in managing the PSPE area.
“If the PSPE is auctioned, the bids will be announced, whoever is interested will just go ahead,” Ida said when met at the Future Renewable Energy Policy discussion event in Jakarta today.
Furthermore Ida said the auction winner could immediately carry out exploration activities. Exploration activities are projected to take three to five years.
Moreover, the Wapsalit area is very easy to develop. Ida said that the project could operate as early as 2022 to 2024 (expected commercial operation date). The working area was held by PLN and was returned to the government in January 2019.
In addition to auctioning the PSPE region, the Ministry of Energy and Mineral Resources also assigned state-owned enterprises (SOEs) to manage four Geothermal Working Areas (WKP) projects, namely the Sembalun WKP with a capacity of 100 MW in West Nusa Tenggara, 85 MW Ranu Lake in North Maluku, Galunggung Mountain 160 MW in West Java, and Gunung Wilis 50 MW in East Java. The four WKPs are working areas that are now ready to be further developed.
September 22, 2019
A historic coal mine in Ombilin Sawahlunto, West Sumatra, that dates back to “Tempo Doeloe” times during the Dutch colonial era, was declared a world heritage site by Unesco in July.
“This is a big achievement for our country. It has been a long journey since 2001 [when we applied for the status] and it was finally approved this year. The Education and Culture Ministry has worked really hard [to achieve this],” Febrian A. Ruddyard, the general director of multilateral cooperation at the Foreign Affairs Ministry, said on Sept. 16.
He said the bestowal of the status is a victory for cultural diplomacy, helping to elevate Indonesia’s image in the international stage and show off the country’s long and unique history.
Hilmar Farid, the general director of cultural affairs at the Education and Culture Ministry, said the ministry will be working closely with the West Sumatra regional government and the owner of the Bukit Asam mining site to manage it.
“This achievement should raise public awareness of the importance of maintaining our cultural heritage. We are thinking of producing a film about the coal mine next year so people will talk more about it,” Hilmar said.
He said the site will be protected and a council will be assembled to manage it according to regulations.
The ministry also revealed a plan to nominate the Kebun Raya Bogor botanical gardens next as a Unesco world heritage site.
“Kebun Raya Bogor is another historic site with a large collection of Indonesian flora that was started 200 years ago,” Hilmar said.
Education expert Arief Rachman said the Ombilin Sawahlunto coal mine should be managed as a place where students can learn and appreciate its history.
“Let’s not turn it into another ‘museum.’ Students are turned off by that term. But it has to be educative, I think a book about the site would be perfect for students,” Arief said.
The coal mine fulfilled all the criteria to become a Unesco world heritage site, but was singled out for highlighting the transfer of technology between Europeans and their colonies in the 19th century.
The site is a repository of historical knowledge in mining engineering and local mining industry. You could see what industrialization was like at the end of the 19th century from its railway construction, underground train tunnels or mechanical coal sorting.
The coal mine at its heyday took up an area of 7,300 hectares, enough space for a company town and residential areas for over 7,000 residents.
Indonesia now has nine world heritage sites in total, including the Borobudur Temple and the Prambanan Temple in Central Java and the Ombilin Sawahlunto coal mine in West Sumatra.
September 24, 2019
Global mined copper output dropped in the first six months of the year by 1.4% to nearly 9.92 million tonnes, mainly due to weather disruptions in the world’s top producer, Chile, and the transition of two mines in Indonesia to different ore zones.
Chile’s production dropped 2.5% as heavy rains in the country’s north and lower grades weigh on the country’s outcome, the latest report by the International Copper Study Group (ICSG) shows.
Indonesia’s copper concentrate output fell by a staggering 55% owing to the transition of Grasberg into block caving and the Batu Hijau mine to Phase 7.
This means that global refined copper market ended the first half of 2019 with a supply deficit of about 220,000 tonnes.
Factoring in changes to unreported, bonded stocks in China, the deficit likely totaled 190,000 tonnes, the industry group said.
Analysts, such as Colin Hamilton at BMO Capital Markets, believe overall output may have fallen further, as the ICSG still has Chinese mined copper output rising.
“On our estimates, and balancing for stronger concentrate imports and spot treatment charges, we believe it may well have fallen,” Hamilton wrote in a note to investors. “We reiterate that, with supply holding up its end of the bargain, the copper market is in deficit this year. However, deficits don’t matter for pricing without improved demand.”
In early September, copper prices fell to their lowest level since mid-2017 due mainly to the ongoing trade spat between the US and China, the world’s biggest consumer of the red metal.
On a regional basis, ICSG data shows that mine production declined 6% in Asia, 1% in Latin America and 3% in Europe, but increased around 2% in North America and 7% in Oceania, and remained essentially flat in Africa.
September 25, 2019
China’s nickel ore imports from Indonesia rose 26.5% year-on-year in August, customs data showed on Wednesday, as stainless steel producers stocked up on raw materials ahead of a ban on exports from the Southeast Asian country.
Following weeks of speculation, top nickel miner Indonesia confirmed on Sept. 2 it would ban nickel ore exports from Jan. 1 next year as it seeks to process more of its resources at home.
That sent benchmark London nickel prices CMNI3 to their highest in almost five years.
China, the world’s biggest stainless steel producer and the top importer of nickel ore, imported 5.72 million tonnes of nickel ores and concentrates in total last month, up 5.5% from July.
That was the highest monthly number since September 2018 but was 7.5% lower year-on-year, data from China’s General Administration of Customs showed.
Imports from Indonesia stood at 1.61 million tonnes, down 8.4% from the previous month but up sharply from 1.27 million tonnes a year earlier.
“Everyone is trying to ship Indonesian ore as much as they can before the end of the year,” said Linda Zhang, a nickel analyst at Wood Mackenzie. “But there will be constraints in terms of mining rate, ship availability and port capacity in Indonesia, so they have to look for other alternatives,”
Shipments from the Philippines, China’s biggest supplier of nickel ore and its most obvious source of alternative supply, came in at 3.99 million tonnes last month, up 13.2% from July. That was the highest monthly total since October but was down 16.8% from August 2018.
Experts say, however, that even though Philippine nickel miners are likely to boost production next year, they cannot match the higher grade of Indonesian ore and will be unable to completely fill the supply void.
Zhang said the month-on-month increase in shipments from the Philippines was a seasonal trend ahead of the monsoon season starting in October. “In the meantime, Philippine miners are also encouraged by the surging ore price thanks to the Indonesian ore ban,” she added.
Chinese buyers “definitely need to stockpile, not only from Indonesia but also from anywhere else,” Zhang said.
Nickel ore inventories at major Chinese ports stood at 12.4 million tonnes as of Sept. 20, according to research house Antaike, down 482,500 tonnes from the previous week.
September 26, 2019
Pacific Rim Cobalt Corp announced results from its ongoing 2019 shallow drilling program at its flagship Cyclops, nickel/cobalt development project, Indonesia. The drilling is part of a multi-faceted exploration program aimed at confirming historical results and guiding a project development plan. Mr Ranjeet Sundher, President and Chief Executive Officer of Pacific Rim Cobalt said that the Company is very pleased with this latest round of drill results. The elevated cobalt values are of significant importance, considering the commodity’s recent price increase and the role it plays in the battery metals supply chain. Both our cobalt and nickel results continue to add to our optimism that the Cyclops project will create shareholder value.
As previously announced highly anomalous cobalt values together with elevated nickel were intersected in the near surface zone. These intersections were encountered in the limonite zone and form a continuous blanket over the entire 600 metre x 300 metre area drilled. This zone varies in thickness from 2 to 11 metres and immediately overlies previously reported nickel values in the saprolite zone and considerably enhances the potential size of the mineralized body of material.
Highlight Intersections include:
11 metres @ 0.89% nickel, 0.15% cobalt; from surface
8 metres @ 1.03% nickel, 0.29% cobalt; from surface
7 metres @ 1.19% nickel, 0.20% cobalt; from surface
8 metres @ 1.42% nickel, 0.16% cobalt; 2 metres from surface
10 metres @ 1.31% nickel, 0.15% cobalt; from surface
10 metres @ 0.80% nickel, 0.14% cobalt; from surface
10 metres @ 1.65% nickel, 0.12% cobalt; from surface
8 metres @ 0.96% nickel, 0.14% cobalt; from surface
September 24, 2019
Nickel Mines has successfully transitioned from being a project developer, to becoming a globally significant nickel producer from operations in Indonesia – all within a year of the company listing on the Australian Securities Exchange.
As full production is achieved, Managing Director Justin Werner says Nickel Mines is looking forward to reporting ‘strong financial results’ from its nickel pig iron (NPI) interests in Central Sulawesi.
Originally a producer of laterite nickel ores from its 80 per cent owned Hengjaya mine, Nickel Mines was prompted to seek out a bigger future as an NPI producer following Indonesia’s 2014 ban on the export of unprocessed ores.
Nickel Mines’ listing on the ASX in 2018 and the formation of a strategic partnership with the world’s biggest steelmaker, China’s Tsingshan, have been key elements in the company’s transformation.
The company’s NPI interests are located in the integrated stainless steel facility known as Indonesian Morowali Industrial Park (IMIP), which was developed by Tsingshan – a response to the export ban and now home to 24 rotary kiln electric furnace (RKEF) lines.
NPI is produced in a pyrometallurgical process (perfected in China in the early 2000s) using laterite nickel ores like that produced by Nickel Mines at its 80 per cent owned (and since resumed) Hengjaya mine, which barges ore around the coast to the IMIP.
Nickel Mines’ recasting as an integrated NPI producer at the IMIP has seen it emerge with a 60 per cent interest in two RKEF lines owned in the Hengjaya Nickel joint venture with local interests, and a 60 per cent interest in two RKEF lines held by the Ranger Nickel joint venture with a Tsingshan subsidiary.
Nickel Mines reported in July that the June 2019 quarter ‘saw a continuation of Hengjaya Nickel’s seamless ramp-up towards full capacity, with the current production run rate now comfortably exceeding the targeted run rate’.
Nickel production for the June quarter was 4386 tonnes at an average NPI grade of 14 per cent, at an average cash cost of US$7725 per tonne (the company’s attributable share was USS2632 per tonne. The company’s average realized price for the quarter for its nickel in NPI was USS12,059 per tonne compared with the LME average of US$12,266 per tonne.
Importantly, and as reflected in those figures, NPI producers enjoy superior payabilities on the contained nickel in their product than is the case with nickel concentrate producers.
That is because the stainless steel producers pay near market price for the nickel in NPI because they are essentially getting their iron ore units for free. In nickel concentrates, they pay for 65-75 per cent of the contained nickel.
The Ranger kilns are in the process of being ramped-up to full production.
‘The June quarter was a remarkably busy period for the company that saw significant advances made towards fulfilling our growth objectives,’ Werner says.
September 23, 2019
Nickel prices climbed on Friday as stainless steel producers bought supplies ahead of a Chinese holiday and an Indonesian nickel ore export ban that could create shortages.
Top supplier Indonesia’s plan to ban exports of nickel ore has been brought forward by two years to January 1, 2020 and the Philippines, the world’s second-biggest ore producer, could suspend five mining companies at the end of this year.
“There have been some anecdotes of stainless mills restocking nickel and that has been positive,” said analyst Nicholas Snowdon at Deutsche Bank in London.
Nickel is mostly used as an alloy in the production of stainless steel.
“Across most sectors, in the week before the Golden Week holiday, you’ll invariably see a bit of raw material restocking, so we have elements of that in nickel alongside the broader potential restocking as we head into the (Indonesia) ban application.”
China celebrates its National Day Golden Week holiday in early October.
Benchmark nickel on the London Metal Exchange gained 2.6 per cent to $US17,725 a tonne in official open-outcry trading, on track for its biggest one-day gain in three weeks.
Base metals also gained support from China cutting its one-year benchmark lending rate for the second month in a row on Friday.
Nickel stocks in warehouses monitored by the Shanghai Futures Exchange slid 13.6 per cent, weekly data showed on Friday.
The premium of LME cash nickel over the three-month contract climbed to $US150 a tonne, near the recent decade high of $US163, indicating near-term tightness.
The global nickel market deficit widened to 6,700 tonnes in July from a revised 2,700 tonnes in the previous month, the International Nickel Study Group (INSG) said on Thursday.
LME aluminium, untraded in official rings, was bid down 0.6 per cent at $US1,790 a tonne after data showed that global primary aluminium output rose to 5.407 million tonnes in August from a revised 5.404 million tonnes in July.
Fitch Solutions cut its average price forecast for copper to $US5,900 a tonne this year and $US5,700 in 2020, from previous views of $US6,300 a tonne and $US6,600 a tonne respectively.
“A drop in Chinese demand has loosened the global (copper) market, while sentiment continues to worsen,” Fitch said in a note.
LME copper was bid up 0.3 per cent at $US5,804 a tonne but remained on course for a 2.6 per cent drop over the week, which would mark its steepest weekly fall since the week ended August 2.
LME three-month zinc was bid down 0.2 per cent in official activity at $US2,308 a tonne, lead gained 0.9 per cent to trade at $US2,114 and tin slipped 0.3 per cent to trade at $US16,400.
September 27, 2019
PT Anggun Makmur Energy (PT AME) is to supply steam coal to power plants in Vietnam as part of an offtake agreement agreed with Commodities Intelligence Centre (CIC) on behalf of its trading platform registered users.
The total contract value is $8.5 million, with the first coal shipment produced by “clean coal technologies” commencing in October 2019.
This agreement will reduce cross-border transaction costs and achieve greater trading synergies in the region, strengthening Singapore’s role as an international trading hub, according to CIC. It also has the potential to influence expansion into other markets in Asia, such as China and the Philippines.
Coal dominates world power generation and is an important and crucial commodity for Asia Pacific, according to CIC. The International Energy Agency, in 2018, estimated Asia produced 70% of the world’s coal, with coal demand projected to grow 5% year-on-year to support the growth of Southeast Asia.
CIC said: “Despite its strong demand, low-cost coal runs counter to the global trend that is looking to cut carbon emissions. As coal continues to be the dominant fuel for power generation in Southeast Asia and Asia-Pacific, the development of clean coal technology and innovative solutions can reduce the environmental pollution that coal brings to the world.”
PT AME is an Indonesia-based coal miner that, through its mining practices, is enabling independent power plants (IPPs) to comply with global CO2 emission standards. Its mines generate less coal ash than others in the industry, according to CIC.
“Their (PT AME’s) technology is able to revive the region’s economically dead mines or old mines with good coal, producing lower volumes of waste material when extracting one-unit tonne of coal,” CIC said. “The overall cost of coal mining is also reduced by up to 80%, providing cost savings to the operation and maintenance of IPPs.”
Peter Yu, Chief Executive Officer of CIC, said: “This partnership with PT AME marks a significant milestone achieved by CIC that will facilitate intra-ASEAN trade and strengthens Singapore’s role as an international trading hub in the digital realm.”
Pak Djoko, President Director of PT AME (pictured left), quoting a 2017 report from Danish Energy Agency, said Vietnam’s import share of total primary energy supply is set to increase to 37.5% in 2025 and 58.5% in 2035 with high demand on imported fuel, especially coal.
He added: “We believe that PT AME will be able to use best practices garnered from our experience in the Asia-Pacific region in supplying the necessary energy source, to meet the demands of Vietnam. Moreover, CIC’s eTrade Platform extensive network and market knowledge will allow us to enter the Vietnam market with confidence and help bring our sustainable and environmental-friendly mining practices to the country.”
CIC is a Singapore-based platform backed by Enterprise Singapore, and is a joint venture between ZALL Smart Commerce Group, a business-to-business (B2B) platform in China; Singapore Exchange; and Global eTrade Services, a subsidiary of eGovernment products and services provider CrimsonLogic. CIC aims to create an interoperable global B2B physical commodities trading platform with global connectivity.
September 24, 2019
President Joko Widodo promised to speed up the process of divestment of 20% of PT Vale Indonesia Tbk. (INCO) shares.
The divestment itself must be done by 14 October 2019.
“The president will help speed up the divestment process. So, the details haven’t been mentioned yet, but the President and his ministers said they would help so that the certainty regarding divestment can be known faster, which will make our investments faster too, ”said CEO & President Director of Vale Indonesia, Nicolas Kanter after meeting with President Joko Widodo at the Presidential Palace Complex on Monday (23/9/2019).
Kanter stated his readiness to carry out the divestment process in accordance with existing regulations. Nevertheless, he admitted that he still did not know who would be appointed as a shareholder of the government.
INCO is required to divest 40% of its shares in accordance with Government Regulation Number 7 of 2014. The regulation is undergoing a fourth revision through Government Regulation Number 1 of 2017 which states that all foreign investment companies (PMA) must divest up to 51% of their shares after 5 years of production.
September 27, 2019
In the first half (1H) of this year, PT Renuka Coalindo Tbk (SQMI) reduced its current year loss from Rp 13.35 billion recorded in 1H 2018 to Rp 4.88 billion.
As quoted from the company’s financial statements, in the first half of 2019, Renuka recorded a gross profit of Rp 234 million and an operating loss of Rp 4.98 billion. In the same period last year, the company recorded Rp 1.41 billion in gross profit and Rp 13.88 billion in operating loss. The company managed to reduce its operating loss with an increase in income from foreign exchange gains of Rp 2.55 billion.
In addition, Renuka recorded a financial income of Rp 391.39 billion, up from Rp 344.34 billion recorded in 1H 2018. With this increase, the pre-tax loss fell from Rp 13.74 billion recorded in 1H 2018 to Rp 4.94 billion.
September 27, 2019
PT Golden Energy Mines Tbk (GEMS) received a credit facility with a maximum ceiling of US$ 32 million from PT Bank Mandiri (Persero) Tbk (BMRI). This loan will be used to pay off the debt (refinancing) of its subsidiaries to the Bahrain branch of ICICI Bank.
As quoted from the disclosure of company information, Sudin, Corporate Secretary of PT Golden Energy Mines Tbk (GEMS) said that the company and its subsidiaries will make a collateral binding 60 days after the date of credit disbursement. “Collateral binding is cross default and cross collateral with existing loan facilities between the company and Bank Mandiri,” he said.
GEMS’ subsidiaries that will receive the facility nclude PT Borneo Indobara (BIB) and PT Barasentosa Lestari (BSL). The interest of the loan facility is 3 months LIBOR and 4.25% per annum with a five-year period.
September 26, 2019
The Energy and Mineral Resources Ministry announced on Wednesday evening that the government tentatively had 938 points of disagreement with the House of Representatives’ proposed revision of the 2009 Coal and Mineral Mining Law.
Ministry secretary-general Ego Syahrial said the points, dubbed the problem inventory list (DIM), amounted to over half the original law, the revision of which was initiated in April last year by House Commission VII overseeing energy and mineral affairs.
Ego told the commission at a working meeting in Jakarta that out of five ministries scrutinizing the proposed revision, only the Industry Ministry objected to the energy ministry’s version of the problem inventory list.
Speaking on behalf of the Industry Ministry, Ego said that it had reservations “related to the mining business process,” and to “erasing a clause on purification”.
The latter point refers to article 143 of the draft revision, which stipulates that regional administrations are responsible for providing training on mineral purification techniques at small scale mines.
Meanwhile, the Finance Ministry, Home Ministry and Law and Human Rights Ministry have all approved the Energy and Mineral Resources Ministry’s version of the DIM.
Going forward, the energy ministry sent on Monday a request to the Office of the Coordinating Economic Minister to help facilitate a meeting between the ministry and the Industry Ministry, said Ego.
“It’s like this is the starting point. We still have a long way to go,” he told reporters after the meeting.
Mining People on The Move
September 24, 2019
The Board of Nusantara Resources Limited (‘Nusantara’, ASX: NUS) is pleased to announce the appointment of Mr Neil Whitaker as a Director, effective from 24 September 2019. Neil joined the Company as Chief Executive Officer on 26 August 20191 and has been engaged with strategic partner PT Indika Energy Tbk, and other major investors, and is advancing planning for the future development of the Awak Mas Gold Project. In his Chief Executive Officer role, Neil will base himself in Jakarta, Indonesia to be close to the project and development team.
Neil has over 40 years’ experience in the mining sector and has held operating and senior executive roles with companies such as Anglo American, Western Mining Corporation, Clough Indonesia (Petrosea Tbk) and Newcrest Mining. Neil has extensive international operating experience with a demonstrated background in leading resource companies through the transitional stages of the full project life cycle. Having previously worked in the Asia-Pacific region and more specifically as the Chief Operating Officer for PT Petrosea Tbk (a subsidiary of our Indonesian strategic partner), Neil has relevant experience which will place him in good stead to drive the Awak Mas Gold Project into the next phase towards development.
After his short induction as Chief Executive Officer the Board is pleased to welcome Neil onto the Board to help guide the Company through this exciting phase towards development of its Project. Neil’s remuneration remains as announced 26 August 2019. The Company will call a General Meeting to seek approval of incentive options proposed for Neil in the ASX announcement date 26 August 2019 and for the Chairman in his executive capacity as announced to ASX on 11 July 2019. Commenting on his appointment Neil stated, “I am very pleased to be appointed to the board of directors. I have confidence that Awak Mas will become the next major gold development in Indonesia” Nusantara is an ASX-listed gold development company with its flagship project comprising the 1.1 million-ounce Ore Reserve and 2.0 million-ounce Mineral Resource Awak Mas Gold Project located in South Sulawesi, Indonesia.
Mining People on The Move
August 21, 2019
Cokal Limited (ASX:CKA, “Cokal” or “the Company”) advises that Mr Gerhardus (Garry) Kielenstyn has resigned as an Executive Director of the Company, effective immediately.
Mr Kielenstyn has worked with the Company since May 2013 when he was appointed Indonesian Country Manager. During June 2016 he was appointed to the role of the Company’s Chief Operating Officer and in January 2017 as Executive Director.
Mr Kielenstyn has resigned from the Board to attend to his other business interests and for personal reasons. The Board thanks Mr Kielenstyn for his work over the years, and wishes him all the best for his future endeavours.
Mining People on The Move
August 5, 2019
The developer of premium Indonesian Manganese Alloys, Gulf Manganese Corporation Limited (ASX: GMC) has appointed highly experienced Mr. Ian Gregory as Company Secretary, as per the latest update on ASX.
Mr. Ian Gregory is a professionally well-connected Director and Company Secretary with more than 30 years of experience in the provision of company secretarial and business administration services. He has previously served as Chairman of the Western Australian Branch Council of Governance Institute of Australia.
On Education front, he has a Bachelor of Business degree from Curtin University and is a Fellow of the Governance Institute of Australia, the Financial Services Institute of Australia as well as a Member of the Australian Institute of Company Directors.
Earlier, Mr. Robert Ierace was serving as Company Secretary; however, due to increasing finance and governance requirements, the company made a decision to separate the finance and secretarial roles in order to strengthen the company’s professional resource base. Consequently, Mr. Robert Ierace is retiring from the position of Company Secretary to focus on his role as Chief Financial Officer.
Gulf to Acquire Strategic Interest in Iron Fortune Pty Ltd
Gulf Manganese Corporation recently made a strategic step to diversify its asset base beyond Indonesia by entering into an agreement to acquire a strategic 20% interest in Iron Fortune Pty Ltd. This is expected to provide Gulf with a first to market exploration opportunity in Timor-Leste. As per the Gulf, Iron Fortune’s strong local relationships and geological knowledge of the region will help the company in growing manganese footprint outside of Indonesia.
To acquire the 20% interest, the company will have to make an initial payment of A$100k for exclusivity while the due diligence process is completed. Both the companies have agreed for coordination in order to develop a work plan and strategic direction. And once the due diligence process is finalised, the company will pay a further A$200k and issue shares worth A$100k; and Iron Fortune will issue Gulf a 20% stake.
As per the financial terms, Gulf will also commit to spending A$300k on the Business by 31 August 2020, and a further $300k in the following 12 months to earn 35% and then 51% interest in Iron Fortune. Once the 51% interest is earned, Gulf will complete a mining study and reach a decision to mine to earn a further 29% interest for a total of 80%. After which, the current shareholders of Iron Fortune will have the right to fund the mining and development costs on a pro-rata basis. In case, Gulf completes the acquisition to 100% of Iron Fortune, the current shareholders will receive a 2.0% Net Royalty on Profit.
As per terms of the agreement, Hamish Bohannan will be appointed Non-Executive Director of Iron Fortune Board.
The company’s management believes that this partnership can significantly de-risk the Gulf’s ore supply chain and help it in expanding its high-quality manganese mining footprint and processing capabilities. It is believed that this will help in the development of Gulf’s Kupang Smelting Hub facility.
The agreement is subject to various conditions, which include:
Gulf undertaking and completing its Due Diligence on Iron Fortune;
Gulf Board approval;
Gulf receiving the necessary regulatory approval (if required);
Confirmation that the Business is in good standing and fully compliant with respect to TimorLeste law and regulations.
Review of Company’s Operations
In the June quarter, the company made substantial operational progress with several key milestones achieved, including the securing of the Company’s Direct Shipping Ore (DSO) licence in May 2019.
In the month of May, the Company’s Indonesian subsidiary, PT Gulf Mangan Grup (GMG) received its Direct Shipping Ore Licence from Indonesia’s Ministry of Trade, allowing GMG to export up to 103,162 tonnes of high-grade manganese ore per year.
During the quarter, key management personnel attended the Vienna’s International Manganese Institute’s (IMnI) annual conference.
Recently, the company vended High-Grade Timorese manganese mine, Putra Indonesia Jaya (PIJ) to its key Indonesian and Singaporean partners and announced its intention to supply the 100% of the ore produced from this mine to Gulf’s operations in Kupang. It is expected that ore supply from the mine will commence in the month of September 2019. By the first quarter of calendar year 2020, the ore supply is expected to increase to around 2,000 tonnes per month.
During the quarter, the company successfully raised A$3.24 million by issuing ~647.20 million shares at $0.005 per share. The company has also agreed to place further 45 million shares at an issue price of $0.007 to Acuity Capital for a total of A$0.32 million in accordance with the Controlled Placement Agreement with Acuity announced on 31 January 2018. As per the company, the funds received from the placements will be used to advance preparations for DSO start-up and for general working capital purposes.
Cash Flow Position
During the June quarter, the company spend $679k of cash on development activities, $485k on staff costs and $624k on administration and corporate costs. The total net cash used in operating activities during the June quarter was around $1.79 million. The net cashflow from investing and financing activities during the quarter was $92k and $5,220k respectively.
The total estimated cash outflows for September quarter is around $1.7 million which includes around $980k to be spent on development, $450k to be spent on staff costs and $280k to be spent on administration and corporate costs.
By ramping up DSO exports over the coming months, the company intends to utilize the generated cash to finalise the commissioning of first two smelting hub furnaces at Kupang, which remain on-track for completion in the first quarter of next year. The company is also advancing discussions with debt funding providers and potential offtake partners to expedite this construction process.
At the time of market close on 5th August 2019, GMC’s stock was trading at a price of $0.007 with a market capitalisation of circa 34.56 million.
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