Kalimantan - Iron Ore
Key points:
- • High grade direct shipping iron ore (DSO) deposit
- • Trial mining produced run-of-mine (ROM) ore averaging 66% Fe
- • Full scale mining to commence July-August 2009, the first truckload of stockpiled ore left
the mine 17 June 2009 to a jetty 70 km away
- • Planned production 250,000 tpa mine increasing if sufficient resources are defined
- • Existing 10,000 t ore stockpile sold under three month contract to Chinese buyer
- • Lincoln will earn a 45% interest in the mine and exploration concession
- • Proposed conditional initial JV commitment by Lincoln of US$2 million, to be taken mainly
from LML’s share of mine profits
- • First overseas project expansion for Lincoln Minerals
- • Enables exciting near-term move from iron ore explorer to iron ore producer
- • Cash flow positive within 6 months of full scale mine start
Lincoln Minerals was invited to become a party to this JV because of its expertise in iron ore
and geological aspects of this project.
Mine background
Lincoln Minerals Limited (LML) entered into a Heads of Agreement (HoA) in February 2009 with
Indonesian mining house, Samusa Corporation of Jakarta, to establish a new iron ore Joint
Venture (JV). The aim is to explore and develop Samusa’s Desa Mirah Kalimantan iron ore mine
and surrounding exploration concession in the south central area of the Indonesian island of
Kalimantan (Borneo).
Samusa, has exclusive rights to mine and sell iron ore from two areas in south central
Kalimantan, a 4,911 hectare exploration area (exploration number 188.4/320-
SK/Distambe/2006) that also includes a 200 hectare exploitation (mining) area (exploitation
number 238 Tahun 2008) upon which trial mining operations have already been undertaken.
A small parcel of 7,000-10,000 tonnes of high grade iron ore has been mined and selected
samples show that the deposit consists of DSO iron ore with grades of 64-69% Fe, with almost
no impurities. The ore is flat lying and outcropping or close to the surface.
Assays of run-of-mine samples, done by Amdel Ltd, produced the following results:
In addition to the mine leases, Samusa also has a stockpile and loading area, plus jetty, located
near Pundu on a river that flows out past the port of Sampit. This is about 70 km by road from
the mine site. It is planned to load ore onto 2,000 t barges for transport down the river for
transhipment onto bulk ore carriers.
Mine development
Trial mining has extracted a small parcel (7,000-10,000 t) of high grade lump hematite iron ore
with an average grade of 66% Fe (see above).
The ore is relatively massive, sheet-like and varies up to 2-3 m thick. Trenching by Lincoln
Minerals immediately adjacent to the trial mine site has shown that the ore is flat lying and
extends over an area of at least 10,000 m2. It defines a small high grade resource sufficient to
support initial mining of 20,000-30,000 t per month over a period of a few months.
Once the existing ore stockpiles have been moved to Pundu jetty, full scale mining is planned to
commence immediately.
Ore is overlain by up to 5m of soil and gravel that will be stockpiled for subsequent mine
rehabilitation and road maintenance. The overburden is free digging.
A critical part of the mine development is upgrading the road to Pundu jetty. Lincoln Minerals
contracted Parsons Brickerhoff consulting engineers to survey and recommend road repair and
maintenance to enable the road to handle the large number of trucks required.
Exploration
Lincoln Minerals also aims to explore for more DSO iron ore in the surrounding exploration
concession. The ore is weakly magnetic and field mapping along with a ground magnetic survey
raise the hope for more than 2 million tonnes of DSO.
Within the high magnetic areas, field work by Lincoln Minerals has identified numerous
outcrops containing over 61% Fe that extend along a zone that is 3.5 km long. A drilling
program is underway to define the extent, thickness, size and grade of the resource. The iron
ore crops out along gullies and on hill slopes.
Basic terms of Lincoln Minerals Indonesian agreement
The essence of the HoA provides that Lincoln Minerals contributes US$2.0 million of funding in
respect of the initial mining and exploration program at Desa Mirah, targeting direct shipping
hematite iron ore. Funds will be provided by Lincoln Minerals on an “as needs” basis but the JV
arrangement has been framed so that proceeds of the sale of ore can be offset against Lincoln’s
contribution obligations. For every tonne over and above 2 million tonnes of JORC-compliant
Inferred Resources from the concession area, Samusa is entitled to a further compensation of
US$0.10 per tonne.
Subject to certain rights to withdraw, Lincoln will acquire a 45% interest in the Project. If it is
determined within 12 months from the date of the HoA that the mining concession contains
less than 250,000 t of iron ore (with an average grade of at least 63% Fe), then Lincoln’s
obligations shall cease and it may surrender its 45% interest.
Lincoln Minerals separately loaned US$50,000 to Samusa to enable mining operations to
commence immediately and to enable the existing ore stockpile (approximately 7,000 t-
10,000 t) to be transported from the mine and loaded onto barges. A three month contract
was agreed to with a Chinese buyer to purchase this ore consignment FOB (Freight on Board)
the barges.
This is an exciting development for Lincoln Minerals, enabling the Company to become an iron
ore producer at little or no cost to its existing investors while it also pursues development of its
advanced iron ore projects in South Australia.
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