05 08 11 IronsandsPigIronProject08112005
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8 November 2005 The Manager Company Announcements Platform Australian Stock Exchange Limited Level 10, 20 Bond Street SYDNEY NSW 2000
Dear Sir, RE: OUTOKUMPU & KRAKATAU STEEL PARTICIPATION IRONSANDS - PIG IRON PROJECT – YOGYAKARTA, INDONESIA
AKD Limited is pleased to announce that Outokumpu Technology Australasia and Krakatau Steel of Indonesia have entered into a Memorandum of Understanding with the owners of the Yogyakarta Ironsands – Pig Iron Project located in Yogyakarta Province, Indonesia (Project), on its development. As detailed in the Company’s announcement on 3 November this year, AKD has reached an agreement with PT Jogja Magasa Mining (JMM) and Nusantara Energy Ltd (NEL) whereby it can acquire a 70% interest in the Project subject to the completion of certain performance hurdles (resource definition & bankable feasibility). JMM currently holds the rights to the Project and NEL has agreed to assign its 70% Earn-In Right in the Project to AKD. The Parties have agreed, subject to feasibility, that the ironsands deposit at Yogyakarta will be used as the basis for the establishment of a liquid iron (“pig iron”) making facility in the Yogyakarta Region to provide feedstock for major regional steel producers. Outokumpu Technology will be carrying out a review of all technical and engineering parameters regarding mineral processing, plant design and infrastructure aspects for the Project. Lurgi Metallurgie GmbH, now part of the Outokumpu Technology Group installed similar technology at the successful New Zealand operations at Glenbrook owned by Bluescope Steel. The Outokumpu review of the Indonesian Yogyakarta Project, together with the planned drilling program by AKD of the ironsands deposit to JORC status, will eventually form the basis of a bankable feasibility study. AKD is in discussions with Outokumpu regarding the execution of the feasibility study. Krakatau Steel of Indonesia, a State owned enterprise, intends to be an offtake partner for the pig iron produced from the Project. Negotiations are currently underway between the parties on a draft offtake agreement that would provide the basis for guaranteed sale of a substantial portion of the pig iron production from Yogyakarta.
Background of Project In September of this year, AKD commissioned consulting geologists Mackay & Schnellmann Pty Limited to investigate the prospectivity of the Yogyakarta ironsands deposit, locally known as the Kulon Progo ironsands deposit. MacKay & Schnellmann revealed that the ironsands deposit is areally extensive containing titaniferous magnetite over a 22km long by up to 1.8km wide strip of coastal plain near Yogyakarta. The deposit is remarkably uniform with depths of at least 10m from surface with surface grades around 13% iron. The deposit was initially drilled by PT Aneka Tambang in the 1970s. Subsequent geological and engineering studies carried out by Amdel in 1973 and by Lurgi/Davy McKee in 1985 reported a deposit of ironsand (which is non-JORC compliant) containing titaniferous magnetite over a 22km long by up to 1.5km wide strip of coastal plain near Yogyakarta. Based on the previous exploration reports and technical studies, Mackay & Schnellmann have estimated that there is an exploration target at Kulon Progo ranging from 336 to 560 million tonnes of ironsands. The exploration target is based on the known length and breadth of the deposit down to sea level depth of 7 metres as ascertained by previous exploration and using a relative density of 2.0 as confirmed by recent testwork. As required by the JORC Code, the Company states that the exploration target is conceptual in nature as there is not sufficient documented exploration data extant to define a Mineral Resource and it is uncertain whether further exploration will result in a resource. The feasibility studies and testwork completed by Lurgi/Davy McKee in 1985 to generate pig iron from the ironsands were positive, however, the deposits at Yogyakarta have lain idle since that time. Upon completion of the proposed capital raising, AKD plans to immediately commence an aircore drilling program at Yogyakarta to bring the Kulon Progo ironsands deposit to JORC status using Mackay & Schnellmann as consulting geologists. Plant Design and Infrastructure AKD has initiated a preliminary study of the engineering, infrastructure and market components relating to the Ironsands – Pig Iron Project located at Yogyakarta. Once Outokumpu Technology has been commissioned to carry out the feasibility study on the Project, a more detailed picture will emerge on the plant design and infrastructure. Subject to feasibility, the ironsands deposit at Yogyakarta will be used as the basis for the establishment of a liquid iron (“pig iron”) making facility in the Yogyakarta Region to provide feedstock for major regional steel producers. It is proposed that standard commercial processing technology, similar to that being successfully operated for ironsands at the Bluescope Steel owned New Zealand Steel operations, would be utilised for development of the Project. The New Zealand Steel operation currently produces approximately 1Mt per year of pig iron for steel production and has been successfully operating since 1975.
It is anticipated that at Yogyakarta sufficient Measured and Indicated Resources of ironsands to JORC status will be required to be drilled out to meet a least a 15 year mine scenario at a minimum production rate of 300,000t of pig iron per year. An initial review by AKD on the infrastructure aspects of the Project has been encouraging. It appears at this early stage that development hurdles appear to be minimal with infrastructure at Yogyakarta well positioned and the project close to power, port developments and local steel demand. Corporate The Company plans to raise initially AUD $2.2 million via a Prospectus which will be priced at 15 cents (post-consolidation) and shareholders will be given a priority right to participate. A resolution will also be included at the forthcoming AGM to change the name of the Company to Indo Mines Ltd and to consolidate the issued capital of the Company on a 1 for 10 basis. The capital consolidation will enable AKD to raise more effectively the funds required to complete the various stages of the Yogyakarta Ironsands – Pig Iron Project. The funds raised will provide capital to complete the planned drilling program by AKD of the ironsands deposit to JORC status, to help establish an operations base at Yogyakarta and to commence the feasibility study to bring the project to a bankable stage.
Yours faithfully,
Zlad Sas Managing Director
NB: Note: “The information in this report that relates to Exploration Results is based on information compiled by Martin Reynolds who is a Fellow of the Australasian Institute of Mining and Metallurgy and a Director of Mackay & Schnellmann Pty Limited. Martin Reynolds has sufficient experience which is relevant to the style of 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”. Martin Reynolds consents to the inclusion in the report of the matters based on his information in the form and context in which it appears”
Dear Sir, RE: OUTOKUMPU & KRAKATAU STEEL PARTICIPATION IRONSANDS - PIG IRON PROJECT – YOGYAKARTA, INDONESIA
AKD Limited is pleased to announce that Outokumpu Technology Australasia and Krakatau Steel of Indonesia have entered into a Memorandum of Understanding with the owners of the Yogyakarta Ironsands – Pig Iron Project located in Yogyakarta Province, Indonesia (Project), on its development. As detailed in the Company’s announcement on 3 November this year, AKD has reached an agreement with PT Jogja Magasa Mining (JMM) and Nusantara Energy Ltd (NEL) whereby it can acquire a 70% interest in the Project subject to the completion of certain performance hurdles (resource definition & bankable feasibility). JMM currently holds the rights to the Project and NEL has agreed to assign its 70% Earn-In Right in the Project to AKD. The Parties have agreed, subject to feasibility, that the ironsands deposit at Yogyakarta will be used as the basis for the establishment of a liquid iron (“pig iron”) making facility in the Yogyakarta Region to provide feedstock for major regional steel producers. Outokumpu Technology will be carrying out a review of all technical and engineering parameters regarding mineral processing, plant design and infrastructure aspects for the Project. Lurgi Metallurgie GmbH, now part of the Outokumpu Technology Group installed similar technology at the successful New Zealand operations at Glenbrook owned by Bluescope Steel. The Outokumpu review of the Indonesian Yogyakarta Project, together with the planned drilling program by AKD of the ironsands deposit to JORC status, will eventually form the basis of a bankable feasibility study. AKD is in discussions with Outokumpu regarding the execution of the feasibility study. Krakatau Steel of Indonesia, a State owned enterprise, intends to be an offtake partner for the pig iron produced from the Project. Negotiations are currently underway between the parties on a draft offtake agreement that would provide the basis for guaranteed sale of a substantial portion of the pig iron production from Yogyakarta.
Background of Project In September of this year, AKD commissioned consulting geologists Mackay & Schnellmann Pty Limited to investigate the prospectivity of the Yogyakarta ironsands deposit, locally known as the Kulon Progo ironsands deposit. MacKay & Schnellmann revealed that the ironsands deposit is areally extensive containing titaniferous magnetite over a 22km long by up to 1.8km wide strip of coastal plain near Yogyakarta. The deposit is remarkably uniform with depths of at least 10m from surface with surface grades around 13% iron. The deposit was initially drilled by PT Aneka Tambang in the 1970s. Subsequent geological and engineering studies carried out by Amdel in 1973 and by Lurgi/Davy McKee in 1985 reported a deposit of ironsand (which is non-JORC compliant) containing titaniferous magnetite over a 22km long by up to 1.5km wide strip of coastal plain near Yogyakarta. Based on the previous exploration reports and technical studies, Mackay & Schnellmann have estimated that there is an exploration target at Kulon Progo ranging from 336 to 560 million tonnes of ironsands. The exploration target is based on the known length and breadth of the deposit down to sea level depth of 7 metres as ascertained by previous exploration and using a relative density of 2.0 as confirmed by recent testwork. As required by the JORC Code, the Company states that the exploration target is conceptual in nature as there is not sufficient documented exploration data extant to define a Mineral Resource and it is uncertain whether further exploration will result in a resource. The feasibility studies and testwork completed by Lurgi/Davy McKee in 1985 to generate pig iron from the ironsands were positive, however, the deposits at Yogyakarta have lain idle since that time. Upon completion of the proposed capital raising, AKD plans to immediately commence an aircore drilling program at Yogyakarta to bring the Kulon Progo ironsands deposit to JORC status using Mackay & Schnellmann as consulting geologists. Plant Design and Infrastructure AKD has initiated a preliminary study of the engineering, infrastructure and market components relating to the Ironsands – Pig Iron Project located at Yogyakarta. Once Outokumpu Technology has been commissioned to carry out the feasibility study on the Project, a more detailed picture will emerge on the plant design and infrastructure. Subject to feasibility, the ironsands deposit at Yogyakarta will be used as the basis for the establishment of a liquid iron (“pig iron”) making facility in the Yogyakarta Region to provide feedstock for major regional steel producers. It is proposed that standard commercial processing technology, similar to that being successfully operated for ironsands at the Bluescope Steel owned New Zealand Steel operations, would be utilised for development of the Project. The New Zealand Steel operation currently produces approximately 1Mt per year of pig iron for steel production and has been successfully operating since 1975.
It is anticipated that at Yogyakarta sufficient Measured and Indicated Resources of ironsands to JORC status will be required to be drilled out to meet a least a 15 year mine scenario at a minimum production rate of 300,000t of pig iron per year. An initial review by AKD on the infrastructure aspects of the Project has been encouraging. It appears at this early stage that development hurdles appear to be minimal with infrastructure at Yogyakarta well positioned and the project close to power, port developments and local steel demand. Corporate The Company plans to raise initially AUD $2.2 million via a Prospectus which will be priced at 15 cents (post-consolidation) and shareholders will be given a priority right to participate. A resolution will also be included at the forthcoming AGM to change the name of the Company to Indo Mines Ltd and to consolidate the issued capital of the Company on a 1 for 10 basis. The capital consolidation will enable AKD to raise more effectively the funds required to complete the various stages of the Yogyakarta Ironsands – Pig Iron Project. The funds raised will provide capital to complete the planned drilling program by AKD of the ironsands deposit to JORC status, to help establish an operations base at Yogyakarta and to commence the feasibility study to bring the project to a bankable stage.
Yours faithfully,
Zlad Sas Managing Director
NB: Note: “The information in this report that relates to Exploration Results is based on information compiled by Martin Reynolds who is a Fellow of the Australasian Institute of Mining and Metallurgy and a Director of Mackay & Schnellmann Pty Limited. Martin Reynolds has sufficient experience which is relevant to the style of 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”. Martin Reynolds consents to the inclusion in the report of the matters based on his information in the form and context in which it appears”
