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  • Kupang Resources Is Closer To Export Approval For Indonesian Manganese 0 comments
    Feb 19, 2014 10:37 PM

    Kupang Resources (ASX: KPR) is moving a step closer to export approval after delivering 300 kilograms (kg) raw manganese ore samples collected from its West Timor project for testing at an authorised laboratory in Jakarta.

    The 300kg raw manganese ore was sourced from the growing raw ore stockpile at the company's Bolok site where its commissioned processing facility await the increase in raw ore deliveries from the manganese mining industry in the region.

    Under the Joint Venture agreement the intention is to export high grade Manganese product using Kupang's dedicated 80,000t/month berth capacity and wholly owned direct ship loading equipment.

    Investors may recall that in February 2013, a JV in which Kupang holds a 55% interest became operational for stockpiling and export of dry bulk manganese from Tenau Kupang.

    This would entail access to the port facilities for the export of processed manganese oxide by direct ship loading from the deep water Tenau port in Kupang of on the island of Timor in Indonesia.

    The JV's ship loading equipment can utilise the facilities to export in the region of 80,000t/month of processed Manganese oxide from the project.

    Indonesian legislative changes

    The recent Indonesian legislative changes for the exportation of minerals which came into force on 12 January 2014 effectively bans the export of a number of raw materials including manganese (Mn).

    The new law requires that to be exported manganese must be processed into a concentrate exceeding 49% contained manganese metal.

    Which effectively places Kupang Resources in a significantly enhanced market position.

    As Kupang Resources at its Bolok plant site, has a processing plant and testing facility capable of producing such a concentrate near to Kupang's deep water port of Tenau - where the Company's bulk ship loading facilities await the first processed manganese for bulk export.

    The recent changes to the export legislation reduce the potential paths to market for the manganese mining industry in Kupang.

    Unless raw ore is processed to a concentrate containing in excess of 49% manganese metal it must only be sold to the domestic market and cannot be exported.

    Samples in detail

    The Kupang Project JV was asked to prepare 300kg of manganese samples consisting of 12 samples with 4 individual 25kg samples representing the 3 physical types of manganese oxide that are found on Kupang, namely:

    - Cucur - alluvial 'river pebble' style of manganese oxide
    - Empe - secondary layered manganese oxide found in clay
    - Rimer - primary massive manganese oxide

    The testing of these samples is required to enable the Department of Energy and Minerals to formally approve Kupang's facility as being authorised to produce a concentrate suitable for export in line with the new legislative changes.

    The authorities have indicated acceptance of the facility but require the formal testing of raw ore to provide the written authorisation required for export formalities to be finalised.

    Significantly, Kupang Resources believes that no other manganese exporter has received such authorisation nor has been asked to participate in such trials.

    Without this authorisation under the new regulations it is Kupang's understanding that no manganese can be exported.

    The testing is expected to take 2 weeks.

    Analysis

    With the recent Indonesian legislative changes that only allows concentrates to be exported coming into play,Kupang Resources is firmly in an advantageous position.

    Given its Bolok plant site, that has a processing plant and testing facility capable of producing such a concentrate near to Kupang's deep water port of Tenau - there is also the Company's bulk ship loading facilities for export of processed manganese.

    Due to the close proximity of the project to this infrastructure, the project is expected to have low operating expenditure.

    So receipt of formal notification will remove the previous constraints on raw manganese ore deliveries to its facility at Bolok and that these will increase towards the design plant capacity of 30,000 tonnes per month of processed manganese oxide lump.

    Guidance for the start of shipping remains April/May 2014 provided the approvals are received prior to this date.

    The manganese production will be blended to target a greater than 80% pure Manganese oxide product for sale into the global manganese market suitable for a high grade blending agent for the Ferro and Silco Manganese smelting industries and has the purity for potential sale directly into the expanding manganese battery market.

    Transition from explorer to manganese producer

    With approvals for export not far away will see a significant milestone for Kupang Resources, namely transitioning from a junior manganese explorer to a producer with the potential to generate steady cash flows.

    Given the location of its project in the Indonesian province of Nusa Tenggara Timur, a region well known globally as a source of high-grade manganese ore Kupang Resources can also expand its exploration in a highly prospective region close to an expanding market.

    This allows the Joint Venture, which is controlled by Kupang Resources via its majority JV interest, to access stockpiled manganese on the island from third party miners who have been unable to export to date due to a lack of resources or necessary regulatory agreements or permits.

    Ultimately, it comes down to valuation and with a Market Cap. of circa $14 million, Kupang Resources is ideally placed to begin the path to share price and valuation increase as it moves closer to shipping date.

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