Company Overview - Indo Mines Limited

Company Overview
30 May 2011
Capital Structure
Market Capitalisation approx $145 million → Undervalued against peers
Volume / Share Price
• ASX Code: IDO
• 211.1m shares on issue
(100% tradeable)
4,500,000
$0.80
4,000,000
$0.70
3,500,000
• 29.6m unlisted options
(incl 28.6m vested and exercisable) 3,000,000
• Up to 35m performance shares
(converting 1 for 1)
• USD $4m convertible note from
Anglo Pacific Group Plc
• Major Shareholders:
Anglo Pacific Group
Rockcheck Steel Co
Deutsche Bank AG
Top 40 Holders
28.8m 13.7%
25.1m 11.9%
14.0m
6.6%
67.9m 32.2%
183.5m 86.9%
$0.60
$0.50
2,500,000
$0.40
2,000,000
$0.30
1,500,000
$0.20
1,000,000
500,000
$0.10
0
$0.00
Volume
Price
Current Projects
Iron Project - Jogjakarta
• 605 Million Tonnes of Iron Sands
• Contract of Works to process
iron sands throughout Indonesia
• Environmental and socialisation
approval received to proceed with
BFS
Mangkok Thermal Coal
- South Kalimantan
• Production commenced
• High quality thermal coal,
approx 6,000 to 7,000 kcal/kg
South Kalimantan Coal
Jakarta
Iron Sands
INDONESIA
Board of Directors
• Martin Hacon (Managing Director/CEO) – former Vice President New
Zealand Steel, responsible for the iron sands business, by-product and steel
manufacturing businesses.
• Chris Catlow (Non-Executive Chairman) – former Director - Business
Development, and founding CFO of Fortescue Metals Group (ASX:FMG).
• Derek Fisher (Non-Executive) – MD/CEO of Moly Mines (ASX:MOL)
• Paul Kopejtka (Non-Executive) – Executive Chairman of Murchison Metals
(ASX: MMX)
• Darryl Harris (Non-Executive) – MD of Beacon Minerals (ASX:BCN) and
Outotec Business Development Manager with significant knowledge of
ferrous technologies.
A New Generation Minerals Producer
Targeting a Unique Market
Niche
TO BE:
• The Domestic Raw Material
Supplier of Choice to the
Growing Indonesian Steel
and Metals Industry
• A Raw Material Supplier Of
Choice to the Asian Metals
Industry
Indonesia Overview
• Democracy with population of
240 million+
• Reformed financial institutions
• The worlds 3rd fastest growing
economy in 2009
• Credit upgrade by Fitch, S&P and
Moody in the last year
• Resource rich (iron, coal, oil…)
600
500
400
300
200
100
0
1980
• One of the top performing
economies through the GFC
7.00%
• Close to the major markets and
growing economies of the world
5.00%
• Government to invest >US$200
billion in new infrastructure projects
Gross Domestic Product US$ billion
1985
1990
1995
2000
2005
2010
% GDP Growth
6.00%
4.00%
3.00%
2.00%
1.00%
0.00%
2007
2008
2009
2010
Indonesian Steel Industry: Overview
• Currently the lowest consumption
of steel per capita in the world
• Next major market for steel
products – China, India,
Indonesia…..
• August 2010 POSCO announce
JV with Krakatau Steel to build a
new 6mt steelworks
• 2009 steel imports represented
5.6% of gross imports. (The #1
imported item by value)
• The steel industry utilises 100%
imported raw materials
• Current capacity 5mt, forecast
domestic demand 2013 of >10mt
Steel Consumption per Capita (kg)
1400
1200
1200
1044
1000
936
800
600
400
200
0
491
419 405
345
187 179 176
123
93
48
29
Pig Iron Market and Opportunity
Market Overview
Indo Mines Opportunity
• Pig iron a direct substitute for
scrap metal
• To be lowest cost pig iron producer in
the world.
• Blast furnace and electric arc
furnace operations require scrap
as feed
• Option to produce iron concentrate to
provide early cash flows.
• Reduced availability of scrap, as
developing countries still in
construction phase
• Increasing correlation between pig
iron price and iron ore price
Iron Sand: What is it?
• Iron Sand is Titano-magnetite,
an abundant ore produced by
volcanic activity
• It contains up to 60% Iron combined
with up to 9% Titania (TiO2)
• High TiO2 is undesirable in blast
furnace feed
BUT
• Ideal feed material for new Direct
Reduced Iron (DRI) technologies
• Vanadium content is a potentially
valuable by-product
• Mining is simple, low cost and
environmentally friendly
Iron Sands Potential - Java
Jakarta
100km
Potential
Krakatau/POSCO
Jogjakarta
JAVA
Iron Sands
20km
JOGJAKARTA
Additional Resource Potential
22km ‐ 605Mt
Iron Sand Mining Concession
Additional Resource Potential
Infrastructure in Place
Jogjakarta
2km
Mining Lease Boundary
• 929 holes, 14,000 samples.
• No overburden or internal waste.
0–6
metres
273
million
tonnes
14.2%
Fe
0 – 20
metres
605
million
tonnes
10.8%
Fe
JORC Resource
• 605 million tonnes, grade 10.8% Fe
• Includes 273 million tonnes near surface sand, grade 14.2% Fe
Surface Sand Unit
(above an average 6m depth)
JORC Resource
(at a cut off of 9% Fe)
Tonnes
(Million)
Grade
(% Fe)
Measured
115.6
13.9%
Indicated
134.9
14.5%
22.5
14.0%
273.0
14.2%
Inferred
• The balance of 332 million tonnes is magnetite bearing gravel grading 7.9%
Fe. Initial testing indicates that a commercial grade concentrate can be
produced
Project Update
Development Timeline
First Concentrate
BFS Complete
2010
Q1
Q2
Q3
First Pig Iron
2012
Q4
Q1
Q2
Q3
Q4
2011
Environmental
Approval
Q1
Q2
Q3
2014
Q4
Q1
Q2
Q3
Q4
Q1
Q2
Q3
Q4
2013
Start Construction
• Environmental and Socialisation approval received to enable completion of
Feasibility Study
• Strategic investment by Rockcheck Steel Co Ltd, one of the largest privately
owned iron and steel producers in China
• Outotec appointed to complete process evaluation and design work for pig iron
production
• Iron concentrate converted to pig iron using DRI technology plus smelting
• Project owned through a Joint Venture company (PMA), Indo Mines 70%,
local partner 30%
Upside Potential
• Processing of 330 million tonnes of gravel not included in
the scoping study
• Increase production to >2 million tonnes per annum of Iron
products
• Contract of Work permits processing of Iron Sands
anywhere in Indonesia – potential for >10 Million
tonnes of iron / pig iron / steel per annum
• Alternate reduction and smelting technology is being
investigated to reduce capital and operating costs
• Increasing Steel Consumption in Indonesia from low base
Indonesian Coal - Why?
• Coal quality and market proximity
gives it a competitive edge
• Synergies with Iron Project – off-take
for processing and power supply
• Indonesian coal production is
booming
• Country risk is diminishing - Now over
257 general mining & support projects
registered; & 93 PT companies with
project approvals
Mangkok Project Summary
Location
• The deposit is located close to key
infrastructure:
• Port load out within 30 kms
• Major haul roads established
and operating
• Mining on same coal seams
on adjacent blocks
Coal Features
• 3 to 4 metre thick seams
outcropping at surface, average
6,000 to 7,000 kcal/kg high quality
thermal coal
Coal Production
• Over 5,000 metres drilled and
10,000 coal samples evaluated
• Revised Mine Plan complete and
production ongoing
Disclaimer
This document has been prepared as a summary only, and does not contain all information about the Company’s assets and liabilities, financial position
and performance, profits and losses, prospects and the rights and liabilities attaching to the Company’s securities. This document should be read in
conjunction with any public announcements and reports (including financial reports and disclosure documents) released by Indo Mines Limited. The
securities issued by the Company are considered speculative and there is no guarantee that they will make a return on the capital invested, that dividends
will be paid on the Shares or that there will be an increase in the value of the Shares in the future.
Further details on risk factors associated with the Company’s operations and its securities are contained in the Company’s prospectuses and other
relevant announcements to the Australian Stock Exchange.
Some of the statements contained in this release are forward-looking statements. Forward looking statements include but are not limited to, statements
concerning estimates of recoverable pig iron, expected product prices, expected costs, statements relating to the continued advancement of the
Company’s projects and other statements which are not historical facts. When used in this document, and on other published information of the
Company, the words such as “aim”, “could”, “estimate”, “expect”, “intend”, “may”, “potential”, “should” and similar expressions are forward-looking
statements.
Although the company believes that its expectations reflected in the forward-looking statements are reasonable, such statements involve risk and
uncertainties and no assurance can be given that actual results will be consistent with these forward-looking statements. Various factors could cause
actual results to differ from these forward-looking statements include the potential that the Company’s projects may experience technical, geological,
metallurgical and mechanical problems, changes in product prices and other risks not anticipated by the Company or disclosed in the Company’s
published material.
The Company does not purport to give financial or investment advice. No account has been taken of the objectives, financial situation or needs of any
recipient of this document. Recipients of this document should carefully consider whether the securities issued by the Company are an appropriate
investment for them in light of their personal circumstances, including their financial and taxation position.
The information in this report that relates to Exploration Results and Mineral Resources of the Jogjakarta Iron Project is based on information compiled
by Mr Philip Welten, who is a member Australian Institute of Mining and Metallurgy. Mr Welten is a consultant of Indo Mines Limited. Mr Welten has
sufficient experience, which is relevant to the style of iron ore mineralisation and type of deposit under consideration and to the activity, which he is
undertaking to qualify as a Competent Person as defined in the 2004 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves’. Mr Welten consents to the inclusion in the report of the matters based on his information in the form and context in which
it appears.
Contact Details
Head Office
Level 1
15 Rheola Street
West Perth WA 6005
Australia
Telephone: +61 8 9322 1825
Fax:
+61 8 9322 1826
Jakarta Office
Plaza Bapindo,
Menara Mandiri, 16th Floor
Jl. Jend. Sudirman Kav 54-55
Email: [email protected]
Website: www.indomines.com.au
Jakarta 12920
Indonesia