Company Overview. January 2012

Transcription

1 Company Overview January 2012

2 A New Generation Minerals Producer Mission: To explore, acquire, develop, and unlock the potential of iron sand mineral assets to establish low cost domestic iron, steel, and metals industries Vision To be the worlds number one producer of iron concentrate and associated products from iron sand creating business value and prosperity for the local community and country. 2

3 Indo Mines Strategy Iron Coal Minerals To be the worlds No1 producer of iron sand concentrate and associated products Secure long-term coal supplies to support the Indo Mines iron and metals businesses Identify complimentary revenue streams & growth opportunities Actions: Develop the Jogjakarta iron sand deposit to its full potential Secure additional iron sand and iron ore resources Secure customer off take agreements for 60 80% of capacity Develop in house DRI capability Implement zero waste methodology Actions: Identify suitable reliable coal resources with mine life of > 25 years. Develop reliable cost effective coal supply through ownership or partnership Secure cost effective logistics solutions Actions: Evaluate new business opportunities and partnerships Evaluate additional iron sand mineral opportunities i.e.; ilmenite & zircon Establish a Vanadium by-product business Enabling Strategies Enhance communication systems & public relations Develop human resource capability Rigorous capital management Enhance commercial capability Enhance business system capability Rigorous cost control 3

4 Strong Board and Management Team Christopher Catlow Chairman Martin Hacon Managing Director Derek Fisher Non-Executive Director Darryl Harris Non-Executive Director Paul Kopejtka Non-Executive Director Hendra Surya Non-Executive Director Xingqiang Zhang Non-Executive Director Michael O Connell President, JMI Stacey Apostolou Company Secretary Highly experienced executive with over 25 years experience in the development and operation of resources projects. Inaugural CFO of Fortescue Metals Group Over 30 years experience in the iron and steel business including 23 years with New Zealand Steel where he was responsible for their iron sands operations, iron making, steel making, and byproducts businesses More than 35 years experience in the resources industry including 20 years experience as a manger of publicly listed companies. In addition to his role with Indo Mines, Derek is the current CEO of Molly Mines A metallurgist with over 20 years experience in the design and commissioning of mineral processing plants. In addition to his role with Indo Mines, Darryl is a Director of Outotec Australia and MD of ASX listed Beacon Minerals 20 years experience in the mining industry as an engineer and consultant. Paul was a founding director of ASX listed Murchison Metals Limited Joined the Rajawali Group in 2005 and is currently the Deputy Managing Director Mining and Resources. Previously with PricewaterhouseCoopers where he was involved with a number of government related projects and a wide number of privatisation and major project financings Founder, owner and current chairman of Rockcheck Steel Group Co., Ltd. operational and management experience in the iron and steel industry Has extensive In excess of 35 years experience at New Zealand Steel in the development and management of iron sand mining operations. Michael is regarded as one of the most experienced iron sand mining and operations experts in the world Over 20 years experience in corporate roles, including as company secretary of other ASX and AIM listed companies Over 175 years of resources exploration, development and operational experience

5 Indo Mines Overview ASX-listed company with assets located in Indonesia Major assets: Jogjakarta Iron Sands Project (70% owned) Strategy to become supplier of choice for the growing Indonesian and Asian steel and metals Industry Key Metrics ASX Code IDO Shares on issue 288.0m Current share price 1 A$0.32 Market Capitalisation A$92m Net Cash Position 2 A$6m Enterprise Value A$86m Experienced Board and management team with a proven track record of developing projects Jogjakarta Iron Project (70% IDO) Substantial Shareholders Rajawali Group 19.9% RockCheck Trading Limited 14.3% Anglo Pacific Group 10.0% Development project located ~30 km s from major city of Jogjakarta, Indonesia Two staged development of the project: Initially focused on 2Mtpa production of iron concentrate With potential to develop a 1Mtpa pig iron plant Jogjakarta Iron Project (1) As at 3 February 2012 (2) Cash at bank 31 January plus second tranche of placement less creditors and Anglo note

6 Indonesia Overview Democracy with population of 240 million+ Reformed financial institutions The worlds 3rd fastest growing economy Credit upgrade by Fitch, S&P and Moody in the last year Resource rich (iron, coal, oil) Gross Domestic Product US$ billion One of the top performing economies through the GFC Close to the major markets and growing economies of the world Government to invest >US$600 billion in new infrastructure projects % GDP Growth 7.00% 6.00% 5.00% 4.00% 3.00% 2.00% 1.00% 0.00%

7 Indonesian Steel Industry: Overview Next major market for steel products China, India, Indonesia.. Currently the lowest consumption of steel per capita in the world 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 Indonesian Government target of 100Mt capacity within 10 years August 2010 POSCO announce JV with Krakatau Steel to build a new 6Mt steelworks Steel Consumption per Capita (kg)

8 Jogjakarta Iron Project Overview 70% owned by Indo Mines; 30% JV partner (PT Jogja Magasa Mining) a consortium of Indonesian business people including members of the Kingdom of Jogjakarta Two staged development of the project: Initially focused on production of 2Mtpa of iron concentrate Development of a 1Mtpa pig iron plant Introduction of DRI technology to Indonesia consistent with the CoW Iron concentrate Free flowing titano magnetite sand is extracted using simple magnetic separation and light grinding to produce an iron concentrate product Pit area during the pilot program Target production of 2Mtpa concentrate at minimum 55% Fe Full scale concentrate production targeted for Q Current Reserves of 13.7% Fe Product is used in the production of iron from blast furnaces and Direct Reduction Iron technology (DRI) Pricing is index linked to the Australian Pilbara (62% Fe) high grade fines price Pig iron plant Finalising the technical design of a 1Mtpa pig iron plant with Outotec, the large European technology provider, Pilot plant has produced first pig iron (September 2011) Pilot plant under construction

9 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) It s high TiO2 content is undesirable in blast furnace feed BUT Ideal feed material for new Direct Reduced Iron (DRI) technologies Vanadium content is a potentially valuable byproduct Rich Titania slag is used as feedstock for the Titania industry or as high quality skid resistant road material 9

10 Iron Sands Potential - Java Jakarta 100km Potential Krakatau/POSCO Jogjakarta JAVA Iron Sands 20km Addi*onal Resource Poten*al JOGJAKARTA Addi*onal Resource Poten*al 10

11 Iron Concentrate Feasibility Study Results Asset Project description JORC reserve Resource Location Mining profile Mining method Potential project life Jogjakarta Iron Project % Fe 605 Fe ~30kms West of Jogjakarta Adjacent to proposed Glajak port Dry mining, truck and shovel 8+ years Key highlights and upside Strong projected cash margins and low capital costs 163.5Mt Probable Mining Reserve (surface sands Final project approvals well advanced 18 months construction time Optimisation will focus on potential to significantly extend mine life by transitioning to dredging, along with potential Production profile First concentrate Q operating cost savings associated with this Discussion with potential off-take partners continuing Production Product type Operating costs Operating cost (FOB) (excl. royalties) Project IRR IRR 2Mtpa 55% Fe Suitable for DRI and blast furnaces US$24.20/t concentrate 44.5% (pre-tax) Development cost US$m Direct costs Indirect costs 22.9 Continency 16.5 Working capital 10.6 Total (incl. 15% contingency) Iron concentrate production will in the lowest cost quartile of world s producers

12 Iron concentrate Mining and Infrastructure Mining Dry mining of surface sand on the Contract of Work Bulk mining using excavators feeding a conveyor system, to deliver ore to a primary screening and magnetic separation field plant Magnetics from the primary field plant are pumped to a secondary plant consisting of grinding and secondary magnetic separation where liberated magnetite is concentrated into 55% Fe product Sand tailings are pumped back to the mine pit to re-fill the mined out areas Commercial trial plant on western boundary of CoW to target production of 20Kt iron concentrate / month Infrastructure Dry Mining Method Java-Bali Power Interconnection passes the Jogjakarta area and is capable of providing power to site Port of Glagah located on Western boundary of project area. Port facility under construction Close to large national airport, accommodation and healthcare facilities

13 Jogjakarta Iron Project Infrastructure in Place High Rail way w a y j o r M a Ro a d J o g j a k a r t a 2km Mining Lease Boundary 929 holes, 14,000 samples. No overburden or internal waste. 13

14 Genuinely Green Mining Simple excavation with no need for blasting or chemicals More than 92% of the material mined is returned to the ground after the iron is extracted Rehabilitation begins as soon as the waste is re-deposited Improved crop productivity by >40% after land rehabilitation Environmental Impact Assessment scoping document (KA-ANDAL) approved Rehabilitation of trial mine area

15 Pig Iron Market and Opportunity Market Overview Pig iron a direct substitute for scrap metal Blast furnace and electric arc furnace operations require scrap as feed Reduced availability of scrap, as developing countries still in construction phase Increasing correlation between pig iron price and iron ore price Indo Mines Opportunity To be lowest cost pig iron producer in the world Successfully manufactured the first iron ingots (September 2011) from iron sand concentrate using the Outotec Ausiron smelting process Smelting trials to quantify the potential of producing 1Mtpa of pig iron results to be used in conceptual plant design

16 Project Timeline and Key Recent Events 2016 Upcoming events AMDAL approval received Negotiations with potential off-takers for both iron concentrate and pig iron continue First shipment of iron concentrate from the demonstration plant Major funding for construction of iron concentrate plant

17 Attractive dynamics for iron ore markets Observations Strong forecast growth in demand Iron ore prices have recovered after falling significantly in October, with the current spot fines price at US$151.0 (1) per dmt FOB Recent high prices have been driven by short term supply squeezes relative to the record high demand Iron Ore (mt) 2,000 1,500 1, Forecast 2011E E demand CAGR = 5.9% Steel production in iron ore importing countries (particularly China) is running at record levels, well above the pre-gfc highs Over the longer term supply-side tonnage should adjust, however market fundamentals remain strong: Strong Chinese growth, estimated at 8% per annum in the short term E 2012E 2013E 2014E 2015E C hina demand Other demand Supply Source: Credit Suisse broker research. Strong growth in pig iron pricing 175% Mar- 09 to S ep- 11 C AGR = 36.8% 150% Near term supply growth constrained by infrastructure Pig iron pricing has exhibited strong growth, increasing 60% since March 2009 on the back of strong Chinese demand growth Indo Mines is well positioned to take advantage of continued strength in iron ore and pig iron markets over the medium term 125% 100% 75% Mar- 09 Jun- 09 Sep- 09 Dec- 09 Mar- 10 Jun- 10 Sep- 10 Dec- 10 Mar- 11 Jun- 11 Sep- 11 Source: Bloomberg. Reflects Chinese domestic pig iron pricing in CNY, rebased to 100% as of March (1) Based on 62% CFR

18 Indonesian Coal - Why? Coal quality and market proximity gives it a competitive edge Indonesian coal production is booming Synergies with Iron Project off-take for processing and power supply Country risk is diminishing - Now over 257 general mining & support projects registered; & 93 PT companies with project approvals IDO will seek value-adding coal projects for the steel industry

19 Summary Indo Mines set to become a significant iron ore producer at the lowest cost quartile of world producers 2Mtpa iron concentrate production at US$24.20/t (excl. royalties) Potential to become one of the lowest cost pig iron producers in the world Pilot plant has successfully manufactured the first pig iron ingots using Outotec Ausiron smelting process Conceptual plant design underway Well located to key end users Off-take discussions with key Asian steel producers for both iron concentrate and pig iron production Strong Board and management team with proven track record of developing and operating resource projects including iron sands Over 200 years of relevant experience Robust project economics provide maximum flexibility for funding options The balance of funding expected to come from a variety of sources, including debt funding alternatives Working with Credit Suisse to evaluate all funding options Indo is positioned to take advantage of continued strength in iron ore and pig iron markets Utilising strong relationships to achieve strategy of becoming a supplier of choice to the growing Indonesian and Asian steel and metals industry

20 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, mineral resources or ore reserves is based on information compiled by Ms Joan Bath, who is a member Australian Institute of Mining and Metallurgy. Ms Joan Bath is a full-time employee of CSA Global, a consultant of Indo Mines Limited. Ms Joan Bath 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. Ms Joan Bath consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

21 Head Office Level 1 15 Rheola Street West Perth WA 6005 Australia Telephone: Fax: admin@indomines.com.au Website: Jakarta Office Plaza Bapindo, Menara Mandiri, 16 th Floor Jl. Jend. Sudirman Kav Jakarta Indonesia