Olympia acquires Kalimantan gold, zircon processing plant

Herdsman-based Olympia Resources Ltd will acquire a zircon and gold processing plant in Sampit, in central Kalimantan, the company has announced.

The full text of a company announcement is pasted below

Summary

• The turn-key purchase of the Sampit zircon concentrate processing plant in Kalimantan will provide Olympia Resources with gross sales revenue of up to AUD$10m p.a. from November.
• At maximum production the Sampit plant will produce a significant cashflow in Kalimantan from Zircon (10,000 tpy), Ilmenite (650tpy), Rutile and Leucoxene (400 tpy), and Gold (1,000 ounces per year).
• The Sampit plant will be followed by construction and operation of the Bati Bati plant, which will take Olympia's maximum production capacity in Kalimantan to 35,000 tpy of zircon, 3,500 ounces of gold plus by-product ilmenite, rutile and leucoxene.
• Total gross sales revenue from both plants at maxiumum production will be approximately AUD$35 million per year.
• Olympia is carrying out a major exploration program over the next six months in Central Kalimantan with the aim of defining significant zircon ore deposits to feed the processing plants to replace concentrate purchases off local miners.

The Board of Olympia Resources Ltd (ASX: OLY) is pleased to announce that it has signed agreements to acquire the land and equipment for a 15,000 tonnes per year (tpy) zircon concentrate processing plant in Sampit in Central Kalimantan. Construction of the processing plant is under way and is to be completed and commissioned in November this year. The cost of the Sampit land and processing plant will be paid for out of existing cash reserves

Sampit is geographically central to the mineral sand mining areas of Kalimantan, and near to mineral sand bearing ground being explored by Olympia.

The Sampit plant site fronts onto the Sampit River, where the plant's licensed wharf can take coastal vessels of up to 3,700 tonnes which allows for bulk shipping of product direct from the plant to customers. Alternatively, 19km by road from the processing site is the Port of Sampit which has container loading facilities for shipping of bagged product in sea containers.

Until Olympia has its own mine in production, zircon concentrate will be purchased off artisan miners in Central Kalimantan.

At the maximum feed rate of 15,000 tpy of typical Kalimantan concentrate the Sampit processing plant will produce the following:

The demand for zircon remains strong and Olympia has received many enquiries from prospective customers in China, Southeast Asia, Europe and South America for the high quality Kalimantan zircon. Olympia sees no problem in selling zircon from the plant at world competitive prices.

On current market prices the above products from the Sampit plant will give a total gross sales revenue of approximately AUD$10 million per year.

Bati Bati Plant

Finalisation of approvals is now close, which will allow work to commence at the Bati Bati site. The Bati Bati plant is much larger than the Sampit plant and will treat a maxiumum of approximately 38,000 tpy of concentrate producing 25,000 tpy of zircon as well as 2,500 ounces of gold and by-product rutile, leucoxene and ilmenite.

Exploration

Although initially the Sampit and Bati Bati processing plants will be fed with zircon concentrate purchased off local artisan miners, Olympia's aim is to find and develop its own large scale mechanised mine in Kalimantan.

Kalimantan is China's largest supplier of zircon, largely derived from artisan mining of old gold mine tailings. As a result of it's exploration program over the past year, Olympia is of the view that significant deposits of zircon exist in under-explored areas outside the gold mine tailings.

Olympia's program over the past year has concentrated on mapping the distribution of zircon and gold in Central Kalimantan, identifying areas of high exploration potential, and securing exploration ground. Olympia is increasing its number of drilling teams from one to four and plans to carry out a major drilling program over the next six months.