INDO Mines has signed an agreement with Outotec to prepare a definitive feasibility study (DFS) for the iron making facility to produce pig iron and vanadium by product from the Kulon Progo iron sands project in the Yogyakarta region of Java. The detailed DFS will provide a basic engineering design that is of a bankable standard with appropriate project capital and operating costs.

The focus of the DFS is an improvement in capital and operating expenditures of the pig iron plant and an improvement in vanadium recovery which is an essential revenue stream for the economic feasibility of the project.

The study will include significant pilot scale confirmatory test work, to be undertaken in Pori, Finland, and Frankfurt, Germany, for the pelletisation, induration, reduction and smelting process. The reduction process will be focused on Outotec’s SL/RN Xtra technology while the smelting process will be focused on Outotec’s circular open bath submerged arc furnace technology.

Indo Mines has been working with Hatch Consultants to provide a feasibility study for design of the co-generation plant with a coal-fired powered boiler. The study will enable negotiations with third parties willing to develop the plant. Additionally a water source trade off study will be undertaken to identify the most reliable and cost effective source of water for the iron and co-generation plant.

Discussions with potential strategic investors for the co-generation plant and boiler are ongoing. Discussions with potential off-takers of pig iron and vanadium slag concentrate are also ongoing. This, and the creditworthiness of potential off-takers, is a critical path item for successful raising of equity and Export Credit Agency debt financing.

A JORC 2012-compliant mineral resource estimate has recently been reported for Kulon Progo. In surface sand on the resource block there are 106.9 million cubic metres in the measured and indicated categories for 206 million dry tonnes @ 13.74% iron, 1.81% TiO2 and 0.07% V2O5. In surface sand in the mining boundary there are 89.9 million cubic metres in the measured and indicated categories for 173.7 million tonnes @ 13.72% iron, 1.81% YiO2 and 0.07% V2O5.

In gravel units on the resource block there are 188.5 million cubic metres in the indicated category @ 7.22% iron, 0.90% TiO2 and 0.03% V2O5. In gravel in the mining boundary there are 150.3 million cubic metres of indicated resources @ 7.23% iron, 0.90% TiO2 and 0.03% V2O5.