Adelaide, Mar 28, 2006 (ABN Newswire) - An Australian-backed pig iron project in Indonesia has taken a major step forward with the start of the first large-scale resource drilling program on known ironsands deposits in the area - Indo Mines Limited (ASX: IDO) announced today a 16,000 metre drilling program had commenced on its Yogyakarta project located on the south coast of Yogyakarta Province in Central Java.

It is the first significant drilling activity in 30 years at the site with results expected by June this year to generate a JORC-based resource to service initially a 300,000 tpa pig iron facility proposed for the area.

"This is the most extensive drill effort made over the ironsands deposit and is being fully funded by Indo Mines as part of its earn-in commitment," Indo Mines Managing Director, Mr Zlad Sas, said today.

"Significantly, the pace of the project can now pick up considerably as the aircore drilling program is being conducted in parallel with a technical review of the Yogykarta Project model being undertaken by the Outokumpu group," Mr Sas said.

"This pairing of activity gives us every confidence of concluding a feasibility study by year's end, providing guidance on expected costs for the processing plant, to be located close to existing local infrastructure."

Pig iron output from the proposed Indo Mines-PT Jogja Magasa Mining (JMM) plant will be used as feedstock for major steel producers in regional Indonesia.

The air core drilling program will involve up to 1,000 holes being drilled into the Yogyakarta mineralisation which is 22 kilometres in length and up to 1.8 kilometres wide. The aircore drill samples will be laboratory tested in Perth.

Indo Mines is earning a 70% interest in the deposit and processing operation together with Indonesia's JMM. International metals groups, Outokumpu and Krakatau Steel, are also project backers, late last year signing a Memorandum of Understanding covering development of the pig iron project's processing plant.

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