Mitrais Mining Newsletter

Baru Gold Corp (the “Company” or “Baru”) is pleased to announce that it has commenced field analysis of the 23 new exploration targets identified in the structural study with some promising initial results.

Initial field analysis began with mapping and sampling of artisanal workings beyond the western boundary of the Priority 1 Kingston Target which has been named Kingston West and then progressed to the mapping and sampling of outcrops found within Kingston.

Assay results of the samples taken from the Kingston West Target returned an average gold grade of 1.84g/t and 2.89g/t for silver. Kingston West contains potential ore grade samples obtained from strongly oxidised quartz veins in tuffaceous andesite returning assays ranging from 0.83g/t – 5.57g/t for gold and 0.90g/t – 9.10g/t for silver.

Assay results from the samples taken from within the Kingston Target returned an average gold grade of 3.89g/t and 3.79g/t for silver. Kingston contains potential ore grade samples obtained from oxidised hydrothermal breccia with tuffaceous andesite and from strongly oxidised quartz veins in tuffaceous andesite returning assays ranging from 0.84g/t – 14.60g/t for gold and 1.70g/t – 13.10g/t for silver.

The 14.60g/t gold assay was obtained from a tuffaceous andesite containing a 0.73m wide strongly oxidised sheeted vein stockwork containing veinlets of quartz ranging from 0.5cm – 10cm wide. An example of the quartz veinlet is shown in Figure 1.

These initial sample results from the Kingston West and the Priority 1 Kingston Target areas have provided some ground truthing of the first of 23 New Exploration Targets defined by the structural study conducted by Murphy Geological Services.

Mr. Frank Rocca, Chief Geologist of Baru, commented, “These are exciting times for the exploration team as we seek to expand our knowledge of the CoW beyond the known Binebase-Bawone deposits for additional ore resources. I look forward to reporting the results of further Field Analysis by the exploration team in due course.”

Zhejiang Huayou Cobalt’s (603799.SS) Indonesian joint venture shipped its first batch of mixed hydroxide precipitate (MHP), a product used to be processed into nickel and cobalt chemicals for EV batteries, to China’s Ningbo port on Monday.

PT Huayue, jointly set up with Tsingshan Holding Group and China Molybdenum Co (603993.SS), said in a statement that it is carrying a cargo with around 9,500 tonnes of MHP from Tsingshan Morowali port.

The venture, which started trial production in end-November, has the capacity to produce 60,000 tonnes of nickel and 7,800 tonnes of cobalt per year.

The $1.28 billion project is closely watched in Indonesia and uses high-pressure acid leach (HPAL) technology to produce nickel and cobalt.

Other HPAL projects operated by Chinese firms including Lygend Resources’ nickel and cobalt smelting project that had delivered its first shipment of MHP in June, 2021.

Indonesian resources firm Aneka Tambang (Antam) is on track to complete the expansion of its ferro-nickel output capacity after entering into an initial electricity supply agreement with state-controlled power company Perusahaan Listrik Negara (PLN).

Construction of Antam’s new East Halmahera Ferronickel Smelter, which will increase overall ferro-nickel capacity by 13,500 t/yr to 40,500 t/yr, was 98pc complete at the end of December, the firm said in a project update.

Antam, which produced 25,818t of ferro-nickel in 2021 and sold 25,991t to export market customers in Asia, has agreed to procure 75MW of electricity for the next 30 years in a two-stage delivery programme over 18 months.

Apart from its growing ferro-nickel business, Antam is a major nickel ore producer with output of 11mn t and sales of 7.64mn t to domestic customers during 2021. Indonesia banned the export of unbeneficiated nickel ore at the beginning of 2021 as part of its strategy to maximise downstream development and establish a niche in the value-added battery materials supply chain.

Antam is also a growing producer of bauxite for the aluminium supply chain and is increasing its output of chemical grade alumina.

The price of benchmark Australian thermal coal rose last week to trade near record highs, providing a short-term boost to producers but increasing the risks of longer-term pain.

The Newcastle index , as assessed by commodity price reporting agency Argus, climbed to $258.59 a tonne in the week to Feb. 11, up from $246.34 the prior week and close to the all-time high of $261.11 from the week to Jan. 28.

Indonesian coal prices have also recorded strong gains since the country’s government allowed most of its coal mines to resume exports after a ban in January, ostensibly to ensure sufficient domestic supplies.

The Argus index for lower-energy 4,200 kilocalorie per kilogram Indonesian coal jumped to $76.59 a tonne in the week to Feb. 11, up 32% from its 2022 low of $58.15 on Jan. 14, but still well short of the record $143.14 from October last year.

Australia, the world’s second-biggest shipper of thermal coal used for power generation behind Indonesia, is seeing strong demand for the polluting fuel from traditional customers in north Asia, such as Japan and South Korea.

It’s worth noting that the bulk of coal bought by these countries is sold under short- and medium-term contracts, and not at the weekly spot price.

This doesn’t mean Japanese and South Korean utilities aren’t paying high prices for their most of their supplies, but it is unlikely they are paying the current extremely high weekly index price.

To put the current price in context, this time last year the Newcastle Index was at $87.43 a tonne, having recovered strongly from its pandemic-low in 2020 of $46.94.

However, between 2012 and the middle of last year, the price had never exceeded $120 a tonne and had spent much of those years between $50 and $90.

This was a period where even though Asia’s coal imports were experiencing strong growth, production was rising even faster as miners in Australia, Indonesia and Russia boosted output in the wake of the previous record high of just under $200 a tonne in 2008.

It was the boost to production that led to years of low prices, during which many miners struggled, before strong demand, especially from the world’s top importers China and India once again created coal shortages.

The key question is how will the industry respond this time to high prices?

As much as the miners themselves may want to bring on new production, the challenges in doing so are far more serious now than they were a decade ago.

SUPPLY TO STAY CONSTRAINED?

In Australia environmental activism has progressed from small groups chaining themselves to coal-export equipment to sophisticated groups using court challenges and pressuring banks and investors to move away from coal.

Coal miners are finding it harder to raise cash and insure projects, a trend likely to continue as climate change gains a bigger share of the public consciousness.

The Australian government’s commodity forecaster in a December report on investment intentions in resources said that the value of coal projects dropped 7% between 2020 and 2021, compared with a 25% jump in that for critical minerals and 36% for gold.

Indonesia’s coal export ban in January will also have rattled potential and current investors, with buyers also likely concerned about just how secure are their imports from the Southeast Asian nation in an era of rising resource nationalism.

Coal’s mantra for much of the past two decades in Asia has been that it is a fuel of choice because it’s cheap and reliable.

The current price surge, coupled with falling investment, undermines the cheap messaging, while the fickle nature of Indonesia’s current government does little to inspire confidence in the reliability argument.

There is also the longer-term response to the current high prices from customers, both existing and potential.

While Japan and South Korea have little choice but to suck up the current high prices, given their energy needs over winter, the question remains as to whether they are likely to try and move away from coal faster.

While liquefied natural gas (LNG) is also expensive currently, largely due to Europe’s shortage of natural gas, the longer-term view for the super-chilled fuel is more encouraging than for coal.

This is implied because substantial investment and capacity additions are in the works for LNG, as top exporters Qatar, the United States and to a lesser extent Australia all expand production.

Then there is the lure of renewables backed by storage. Not only do these energies such as wind and solar not rely on imported fossil fuels, they offer countries pollution advantages and most likely export advantages assuming carbon border taxes become a reality.

Indonesia’s export growth slowed more than expected in January, after authorities in the world’s top thermal coal exporter banned coal shipments, a move that shocked the global energy market.

The January trade surplus was bigger than expected at $930 million, however, official data showed on Tuesday, compared with a $190 million surplus seen in a Reuters poll, as imports rose more slowly than predicted.

Indonesia on Jan. 1 suspended coal exports due to low inventory at power plants. Shipments resumed gradually from Jan. 10 but the ban still applies to miners not compliant with domestic sales requirements.

The resource-rich country has recorded a trade surplus every month since May 2020 due to an upward trend in commodity prices as countries lift COVID-19 restrictions.

January’s exports grew 25.31% annually, short of the 33.86% expected in a Reuters poll and the slowest increase in the past year. Total exports were valued at $19.16 billion, the smallest since June.

Exports of products classified as mineral fuel – much of which is coal – dropped by $2 billion from December, with shipments to China, India and the Philippines most affected.

Tin exports fell $259 million in January from a month earlier, due to delays issuing export permits.

Meanwhile, imports increased 36.77% to $18.23 billion, compared to 51.38% expected in the poll.

“I see this as a good situation, that even without the support of coal in January we could still book a surplus. This means with the reopening of exports in February, we will see surplus soaring,” said Trimegah Securities economist Fakhrul Fulvian.

Bank Danamon economist Wisnu Wardana said consumer goods imports were typically weaker early each year and vaccine purchase was low in January, but imports continue to rise, pressuring the trade surplus.

“Demand will accelerate more in 2H22, which will be followed by a widening current account deficit to 1.9% of GDP this year and a higher volatility of the rupiah,” he said.

Sumitomo Metal Mining Co Ltd (SMM) said on Tuesday it will triple its capital expenditure over the next three years to boost its output capacity of nickel and cathode materials used in batteries.

The Japanese miner and smelter plans to spend 494 billion yen ($4.3 billion) in capital expenditure, excluding investment and lending, in the next three years, up from 164 billion yen spent last three years.

“Our long-term goal to become a global leader in nonferrous metals remains unchanged,” President Akira Nozaki told a news conference on a new three-year business plan through March 2025.

“We also want to maintain a leading position in nickel-based cathode materials market by expanding production capacity,” Nozaki said.

Using some of the funds, SMM, which also makes electrical materials, plans to boost its monthly output capacity of cathode materials for rechargeable batteries used in electric vehicles to 10,000 tonnes by end-March 2028 and 15,000 tonnes by end-March 2031 from nearly 5,000 tonnes now to meet burgeoning demand.

SMM supplies the nickel-cobalt-aluminium (NCA) cathode materials used in Panasonic Corp’s lithium-ion battery that powers Tesla Inc’s Model 3 and Model X cars.

To secure nickel, SMM wants to make an investment decision on the Pomalaa nickel project in Indonesia “as early as possible,” Nozaki said. He also said the project aims to start production in late-2020s with a capacity of about 40,000 tonnes of mixed sulphide nickel. SMM’s local partner in the project is PT Vale Indonesia.

In Chile, the Quebrada Blanca 2 copper project is due to launch production later 2022. SMM’s copper output through its shareholding in the project is expected to reach 270,000 tonnes in the year to end-March 2025 from 230,000 tonnes this year.

The Cote gold project in Canada, in which SMM has a stake, is scheduled to begin production in the first half of 2023.

It will also spend another 109 billion yen in investment and lending for the next three years.

Despite the ambitious investment plan, SMM expects its net profit to fall to 118 billion yen in the year to end-March 2025, from an expected 248 billion yen for this year due to lower metals prices.

The Indonesian government will allocate 127.1 million metric tons of coal to meet the demand from steam power plants (PLTU) in 2022.

Minister of Energy and Mineral Resources (ESDM) Arifin Tasrif said the steam power plant (PLTU) owned by PLN will require 64.2 million metric tons of coal. Meanwhile, the PLTU owned by independent power producer (IPP) or private companies, will require as much as 62.9 million metric tons of coal, he added.

“The average need can reach 10 – 11 million metric tons per month,” said the minister during a working meeting with Commission VII of the Indonesian House of Representatives here on Thursday.

The government is implementing Domestic Market Obligation (DMO), which requires companies to fulfill the provision on allocating a percentage of sales for domestic needs, to ensure the availability of coal for power plants, he explained.

Tasrif emphasized that the DMO obligation applies to all coal mining companies operating in Indonesia, and has been set at 25 percent of the production volume.

Companies that cannot fulfill the DMO or sales contracts will be subject to sanctions such as export bans and fines, he said.

“A special price for DMO coal that has been set for power generation needs refers to the reference coal price (HBA), which is US$70 per metric ton,” the minister said.

In 2022, the government is targeting total coal production of 663 million tons, with a DMO plan of 166 million tons. Meanwhile, the realization of coal production until January 2022 has been recorded at 34 million tons, with a total DMO of 13 million tons.

By 2025, the allocation of domestic coal needs will increase from 166 million tons in 2022 to 208 million tons in 2025.

The increase in coal demand is to meet the fuel needs for power plants, mineral processing and refining industry, fertilizer industry, cement industry, textile industry, paper industry, chemical industry, as well as coal downstreaming.

Three Indonesian state-owned companies — coal producer Bukit Asam, utility PLN and rail operator Kereta Api Indonesia (KAI) — have signed an interim agreement aimed at strengthening cooperation on the country’s coal supply chain.

The firms will collaborate to create a comprehensive study relating to cooperation schemes, business models, technical and operational partnerships, and other factors. The result of the study will serve as a guideline for delineating each company’s role in the partnership.

The interim deal is a follow-up to an initial agreement signed between the three companies in August last year.

Bukit Asam will be responsible for supplying coal to PLN’s power plants using KAI’s railway system under the proposed partnership. The three companies are planning to have an operational system ready for deployment by 2025, with Bukit Asam supplying 20mn t/yr of coal to PLN under the terms of the proposal.

Bukit Asam said that the tripartite agreement will be a long-term project aimed at strengthening the country’s national energy security. Jakarta said last year that it will start phasing out coal-fired power plants from 2030 but the process is expected to be drawn out as renewable energy investments are below the level required to offset power supply losses when coal-fired power plants are decommissioned. Bukit Asam and PLN think that coal will continue to play a significant role in Indonesia’s energy mix at least in the next two decades.

The additional supply from the proposal will also serve as a security net in the event of issues in the delivery of coal from private-sector producers to power plants. Indonesia narrowly avoided two power crises in a span of a year in the first quarters of 2021 and 2022 because of a lack of coal deliveries to power plants. This resulted in a month-long export ban in January this year and institutional changes in both coal supply contracting and monitoring of coal deliveries.

Coordinating Minister for Economic Affairs Airlangga Hartarto officiated the groundbreaking of PT Smelting’s factory expansion in Gresik District, East Java Province, on Saturday.

The expansion aims to increase the production capacity to 30 percent, from the earlier capacity.

“The current production capacity is able to reach 300 thousand tons of cathodes. With the expansion worth Rp3.2-trillion of investment, the production capacity is expected to reach 342 thousand to 350 thousand tons of copper cathodes per year,” Hartarto remarked.

This expansion is also able to increase the total absorption capacity of one million concentrate covers to reach 1.3 million. The Java Integrated Industrial and Port Estate (JIIPE) in Gresik is also estimated to increase the number of concentrate covers to reach two million per year.

With the expansion and development of the industry in Gresik, Hartarto is optimistic that all of Freeport’s production would be processed domestically.

In addition, this expansion demonstrated that Indonesia’s strength in the industry would continue to be improved. Gresik is also expected to become a concentrated industrial management cluster.

Director of Business and Commercial Development Irjuniawan P. Radjamin affirmed that construction for this factory’s expansion would take two years.

“The construction is targeted to be completed before the end of December 2023,” he stated.

PT Smelting has, so far, been processing copper concentrate from PT Freeport Indonesia’s mining in Papua. PT Smelting has three factories: a smelter, refinery, and sulfuric acid plant.

This expansion work aims to add a new sulfuric acid plant, increase the capacity of some equipment in the smelter, and increase the number of electrolysis cells in the refinery, he remarked.

“PT Smelting will continue to make a contribution to Indonesia. With this increase in production capacity, it will certainly strengthen Indonesia’s position as one of the world’s copper producers,” Radjamin concluded.

Erick Thohir Appoints Former Jasa Marga Director Arsal Ismail To Be Bukit Asam’s Managing Director

Minister of State-Owned Enterprises (BUMN) Erick Thohir has appointed Arsal Ismail as President Director of PT Bukit Asam Tbk or PTBA to replace Suryo Eko Hadianto.

The decision was made at the Extraordinary General Meeting of Shareholders (EGMS) which was held today, Thursday, December 23, 2021.

“The shareholders propose the appointment of these names as members of the directors and commissioners of PT Bukit Asam,” said Bukit Asam’s President Commissioner Agus Suhartono at the EGMS which was broadcast virtually, Thursday, December 23.

For your information, Arsal Ismail previously served as Director of Business Development of PT Jasa Marga (Persero) Tbk (JSMR). He also served as Jasa Marga’s Director of Business Development from June 2020 to December 2021.

In addition to appointing Arsal Ismail, the EGMS also dismissed Dwi Fatan Lilyana as Director of Human Resources, Fuad Iskandar as Director of Business Development, and Jhoni Ginting as Commissioner.

The EGMS also approved the appointment of Suherman as Director of Human Resources, Rafli Yandra as Director of Business Development and Devi Pradnya Paramita as Commissioner.

The following is the composition of the members of the board of directors and commissioners of PTBA:

Commissioner

President Commissioner and Independent: Agus Suhartono

Commissioner: Irwandy Arif

Commissioner: E. Piterdono HZ

Commissioner: Carlo Brix Tewu

Commissioner: Devi Pradnya Paramita

Independent Commissioner: Andi Pahril Pawi

Directors

Managing Director: Arsal Ismail

Director of Finance and Risk Management: Farida Thamrin

Director of Human Resources: Suherman

Director of Operations and Production: Suhedi

Director of Business Development: Rafli Yandra

Resignation of a Director and Appointment of Chief Financial Officer

The Directors of Nickel Mines Limited (‘Nickel Mines’ or ‘the Company’) advise of the resignation of Mr Peter Nightingale as Executive Director and Chief Financial Officer (‘CFO’) of the Company.

As a founding director of the Company and serving in the capacity of CFO since 2007, Peter has played a leading role in navigating the Company through its development years and orchestrated its strategic relationship with the Tsingshan Group before overseeing its Initial Public Offering in August 2018 and leading the various transactions and financings that today sees the Company as a leading global nickel producer.

Peter will be succeeded as CFO by Mr Chris Shepherd, a Chartered Accountant who holds Bachelor degrees in Applied Finance and Commerce. Most recently Chris acted as a Partner and Managing Director of The Pallinghurst Group in London and has over 20 years’ experience in private equity, investment banking and corporate finance, advising on more than US$30 billion in transactions across Australasia, North America, Europe and Africa.

Prior to The Pallinghurst Group where he was responsible for establishing and executing Pallinghurst’s battery materials investment strategy, Chris was an investment banker at Merrill Lynch and Deutsche Bank gaining extensive experience in transaction origination, structuring and execution across the mining, industrial and consumer sectors. Chris commenced employment with the Company in early August 2021.

Commenting on Peter’s departure and the appointment of Chris to the position of CFO, Nickel Mines Chairman Rob Neale said:

“We sincerely thank Peter for his substantial contribution to the Company over the last 14 years. As a founding Director of the Company, Peter has been instrumental in helping build Nickel Mines into the Company it is today and he leaves the Company well positioned to pursue future growth opportunities and enjoy further success. While saddened to see Peter depart, we are delighted to welcome Chris to the Nickel Mines’ team. Chris has a first-class pedigree as a financial executive and will make a strong and immediate contribution to our executive team.”

In accordance with ASX Listing Rule 3.19A, attached is an Appendix 3Z, Final Director’s Interest Notice, for Peter Nightingale.

Baru Gold Corp Appoints New Director Colin James Davies to Board, Broadens Technical and Indonesian Team

Baru Gold Corp (“Baru Gold” or the “Company”) is pleased to announce the appointment of Mr. Colin James Davies to the board of directors.

Mr. Davies is a senior mining executive with broad-based international experience in business development, corporate acquisitions, strategic and business planning, general management, knowledge databases, information technology, budgeting, and commodities. He has a successful track record in negotiating joint ventures with his technical background, IPO capital raising and investment analysis globally.

As a structural geologist by education with almost 40 years of work experience in minerals exploration, of which 30 years have been aggregated in Indonesia, Mr. Davies is well versed in Baru Gold’s projects. He holds a BSc (honours) in Geology from University College Cardiff, UK and completed three years of post-graduate research in Namibian structural geology at Leeds University, UK.

His career started at Anglo American as a gold mine geologist in South Africa at Vaal Reefs working on brownfield exploration. His travels would take him across the world with BP Minerals for diamonds, and ultimately to Jakarta, Indonesia where he would spend nearly 30 years mainly in gold exploration. Early formative roles with Santa Fe Gold and the Pelsart Group led into senior management positions with global mining contractors before culminating with eight years at the J Resources Group, a US$300 million market capitalization mid-cap 150,000oz per annum gold producer, where he was both their Independent Director and held various senior executive roles during his tenure.

Most recently, Mr. Davies established GeoToria Holdings Limited as an independent think-tank to provide knowledge-based services for peer-to-peer corporate advisory, consultancy, benchmarking, due diligence, investment targeting, and contract research and development with the use of empirically built database sets, custom designed for each client and their specific requirements to make informed decisions having added 25,000 projects and 2,500 companies to his proprietary M&A database. He also founded and is a director of Triquetra Resources Limited, a London-based group that identifies orphaned projects and matches their development programs with mining and exploration investors.

Mr. Terry Filbert, President and CEO of Baru Gold, commented, “Colin brings to Baru Gold decades of geological experience in Indonesia as his whole professional life has been associated with discovery, both greenfield (from the first holes in the ground) and brownfield (building inventory near a mine resource). More specifically, he has a wealth of knowledge in the North Sulawesi geological and political arenas and his experience will be valuable to ensure success and efficiencies in near tern production and future exploration at our Sanghie Gold Project.”