Adelaide, Sep 28, 2006 AEST (ABN Newswire) - Indo Mines (ASX: IDO) is pleased to announce that it has now earned a 30% interest in the Yogyakarta Ironsands Pig Iron Project in Central Java, Indonesia, following the release yesterday of the final JORC Code compliant resource statements for the Project.
The Company has reached an agreement with Indo Mines' partner in the Project, PT Jogja Magasa Mining, to vary the original Earn-In Agreement, so that Indo Mines can now earn an initial 30% interest in the Project upon completion of a Measured JORC Code compliant resource. Previously, Indo Mines could only earn equity at the end of the earn-in phase, which was a 70% interest upon completion of a positive Feasibility Study.
Indo Mines still has to complete the Bankable level Feasibility stage to earn a further 40% in the Project, whereby it will have an outright 70% interest in the Project. A Feasibility Study is scheduled to commence next month by Outokumpu and subject to a positive outcome, 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.
The JORC Code compliant Measured/Indicated/Inferred Resource for the Surface Sand Unit at Yogyakarta totals 273 Mt of magnetite-rich near surface sand grading 14.2% (to an average 6m depth and at a cut-off of 9% Fe) and contains the iron equivalent of about 39 million tonnes of Fe. This magnetite-rich surface sand will be the initial mining area for the Project and the shallow average depth of 6m will allow the Project to be amenable to simple and cheap dry mining techniques.
This amount of contained iron paves the way for the development of the Yogyakarta deposit, which has enough contained iron to supply a minimum production of 500,000 tonnes of pig iron annually for a minimum of 20 years. Alternative production scenarios will be investigated in a Bankable Feasibility Study scheduled for commencement by Outokumpu next month.
This type of magnetite-rich mineral sand deposit has been successfully exploited in New Zealand for the past 25 years where ironsand is mined and 700,000 tonnes of pig iron are produced annually. Preliminary testwork by Outokumpu Technology has shown that the ironsands at Kulon Progo,Yogyakarta, can be similarly upgraded from 14% Fe to above 50% Fe. The Company will now complete a capital raising and commission Outokumpu Technology Australasia to commence a Bankable level Feasibility Study of the Yogyakarta Project.
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