INDO Mines is advancing plans to develop a smelter at its Kulon Progo Iron Sands Project near Jogjakarta in Java. Following completion of the second transaction for development of the plant, the company is seeking to issue a quasi-debt instrument for US$20 million to $24 million to provide funding for construction of a beneficiation plant and to provide iron sand concentrate for the smelter.
The debt funds will also be used to meet working capital requirements and repay the Anglo Pacific Group convertible debenture facility.
Indo Mines’ major shareholder PT Rajawali Corpora has recently provided a revolving credit facility for US$150,000 for a period of three months to enable the company to keep operating.
During April the company was still awaiting finalisation of a share purchase agreement for the sale of its 51% interest in Sapex Oilfield Services Ltd. Sapex is an established regional provider of the world’s leading composite mat system, which is designed for use in remote and challenging terrain-access locations. Sapex holds the licence to distribute the mat system within Indonesia, technical services capability, in-house developed downhole tools and three existing sub-contracts to provide services.
The fact that the company was awaiting the receipt of funds from the Sapex sale and the signing of an agreement for development of a smelter, meant that it was unable to sign-off on the financial statements for the six months to December 31, 2016, on the basis of a going concern.
Quantitative test work has been conducted for export quality concentrate. The work by PT Geoservices has been critical to confirm the scale plant assumptions used in equipment sizing and calculating yields. This allows Indo Mines to confirm calculations from the basic engineering design on actual operating costs with a relative level of comfort.
Samples from two completed tests have been delivered to potential off-takers. The particle sizing of the export test product indicated the concentrate will not have to be ground as fine as initially considered, to the point where one stage grinding may be sufficient to produce the required iron level.
Another test is under review but results are in line with the expectations of Indo Mines’ technical teams and will be included for independent review when assessing the resource conversion to reserves.