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Gulf Manganese Corporation Reinforces High EBITDA Of Smelter Project

Gulf Manganese Corporation's (ASX:GMC) planned manganese smelter in Timor remains a highly attractive project with a redrafted study highlighting EBITDA of US$374.7 million over 10 years with an NPV of US$160.6 million.

This requires a start-up capital investment of US$66 million staged over five years and an IRR of 55.6%.

The redrafted study was carried out to comply with the Indonesian Government's introduction of the Investment Coordination Board's (BKPM) "one stop shop" procedure.

Gulf noted that this has substantially reduced the licensing process time with the BKPM advising that the Industrial Business Licence will take 20-25 days from application to be approved.

This will be followed by the process of becoming a Registered Exporter, which is expected to take 20-25 days from application.

Upon completion of these two licences Gulf intends to commence the construction of the first furnace module with the plant expected to come online within 12 months of starting construction.

Gulf plans to build eight furnaces over a four year period that will produce a premium quality 78% ferromanganese alloy resulting from the unique qualities of the Indonesian high-grade low impurities manganese ore.

The company also plans to list on the Singapore Exchange, aligning the project with its Asian regional investor base.

Timor Smelter Study

The study is based on a manganese purchasing, processing and smelting business for Gulf Manganese's smelter in Indonesia.

Capex is estimated at US$66 million over five years for a project that will be capable of producing 155,000 tonnes per annum of premium quality 78% ferromanganese alloy.

High grade manganese ore will be purchased locally from Indonesia and iron units added by purchase of iron ore from Sumatra.

Net turnover is estimated at US$1,358 million over 10 years, EBITDA at US$ 374.7 million, NPV at US$160.6 million and IRR of 55.6%. Payback is expected within two years.

The first two furnaces are planned to be built during 2015 and are expected to come online in July 2016.

This will be followed by a further two furnaces each year in 2017, 2018 and 2019.


The redrafted study for the Timor manganese smelter further demonstrates the benefits of having access to high quality manganese ore, access to existing port and infrastructure as well as lower than average industry costs.

Financial metrics are impressive with EBITDA of US$ 374.7 million, NPV of US$160.6 million, IRR of 55.6% and payback expected within two years.

Once land for the project is finalised, most likely during July 2015, the company will immediately apply for the Industrial Licence.

This will in turn lead to the first two furnaces coming online in July 2016.

Share Price Catalysts:
- Securing land;
- Securing the Business Licence;
- Official Ground Breaking Ceremony;
- Commencing construction; and
- Finalise Power Plant commissioning to build.

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