Malaysia Smelting Corporation has announced an agreement between its 60% owned local subsidiary PT Tenaga Anugerah (PT TA) and PT Sarana Marindo (PT SM) which will allow it to start offshore tin production in Indonesia in the first quarter of 2008.
PT TA owns two cutter suction dredges while PT SM has mining concessions covering 1,020 hectares, with mining exploitation status and Environmental Impact Assessment (EIA) approvals already secured. The cooperation between PT TA and PT SM is on a tribute mining basis, in which the former is responsible for mining and marketing and the latter will receive monthly tribute payment based on tin production valued at prevailing London Metal Exchange tin prices.
The capital investment required to implement the offshore mining venture is estimated at US$5.5 million, including an upfront payment of US$4.7 million to PT SM as consideration for the acquisition of the mining rights. Based on the 60% shareholding, MSC’s contribution towards the capital investment will be US$3.257 million. Based on past drilling results, the mining concessions are estimated to contain some 7,000 tonnes of tin resources with a mine life of up to 8 years. However, further confirmatory drilling will be carried out to accurately assess the tin grades and reserves required for mine and production planning.
MSC’s main tin interest in Indonesia is its 75% stake in PT Koba Tin, which has onshore mining operations and a smelter on Bangka island.
