Perth-based Indo Mines has received government approval to develop its $870 million Jogjakarta liquid iron project in Indonesia, the first such approval granted to a foreign company in over 10 years.
Perth-based Indo Mines has received government approval to develop its $870 million Jogjakarta liquid iron project in Indonesia, the first such approval granted to a foreign company in over 10 years.
The announcement is pasted below:
The Board of Indo Mines Ltd (ASX:IDO) is pleased to advise that the Company has received a Government approved Contract of Works to develop its Jogjakarta Liquid Iron Project ('the Project').
This Mining Licence is the highest level of approval required for development of the Project, and provides long-term security of tenure.
This is a major milestone and step toward production for Indo Mines and the Project has the potential to become one of the lowest cost liquid iron producers in the world.
Indo Mines is developing a US$600 million, one million tonne per year liquid iron project at Jogjakarta, on the Indonesian Island of Java. In September 2006 the Company identified a JORC compliant mineral resources of 605 million tonnes (refer ASX Release dated 27 September 2006), the initial focus being the 273 million tonne surface sand unit down to a maximum depth of 9 metres.
A Scoping Study completed by Promet Engineers has identified that the simple shallow mining operation, the availability of low cost thermal coal required for the reduction process and the processing facility being located on the mine site adjacent to existing rail and power infrastructure resulted in operating costs of approximately US$150/tonne of pig iron.
The proven liquid iron processing technology is based on Bluescope Steel's New Zealand Glenbrook Facility, which has been in operation for more than 30 years. Promet are currently updating the Scoping Study to ascertain the improvement in project financials based on the significant increase in the price of liquid iron from US$300 to more recently traded pricing of US$500-US$600 per tonne.
The Contract of Works is the first of its type to be granted to an international company in more than ten years, and the first ever to be granted in Java. The Contract of Works is a binding agreement with the Government of Indonesia and is protected by International law. Indo Mines Managing Director Phil Welten said this was a major achievement for the company.
"This is a significant step forward; Indo Mines has been working closely with the Indonesian Government, local communities and other stakeholders for more than three years to reach this point. Receipt of this level of approval is a key to securing foreign investment support and allows us to proceed with full confidence to the next phase of development, and the completion of our feasibility study by the second half of 2009.
"Located in Indonesia we have on our doorstep a major market for liquid 'pig' iron, where at the moment 95% of product is imported for domestic use.
"We have had strong local, regional and central support in the development of this Project, which reflects the approach we have taken, and the strategic importance of this liquid iron project to the local and national economy," Mr Welten said.
The Company has already installed a pilot plant on site that is being used to generate test samples and to demonstrate the simple mining techniques, concentrator process steps and rehabilitation of the mining areas in preparation for agricultural use.
Development and approval for the project has been facilitated by the fact that it does not involve significant environmental or forestry issues. The Company believes the Project represents a low risk, low cost mining and hot metal processing operation with extensive resource and marketing potential.
The Project will provide significant investment into the local and regional economy, providing thousands of jobs and supporting community infrastructure. Indo Mines has consulted closely with communities in the region, and has already established a system of compensation for farmers during mining, and a community program to allow for site improvement after rehabilitation.
