Quarterly Activities Report Period ended 31 December 2018
ASX Announcement 31 January 2019
Highlights:
- Successful restructuring of debt facility and cornerstone investments with PT Jayatama Tekno Sejahtera (“PT JTS”) and its subsidiary, PT Jayatama Global Investindo (“PT JGI”)
- PT JGI has waived final conditions precedent and restructured its A$6m Convertible Note into 25.1% of the issued capital in GMG and a A$5m loan repayable from the profits of commercial production from the Kupang manganese smelter hub
- PT JGI to invest an additional A$6m at 1.5 cents per share in conjunction with a separate Singapore-based ore and alloy trading company agreeing to invest A$2m at 1.5 cents per share – both investments to be completed over two tranches
- First tranche being A$3.6m of the $8m investment completed post quarter end – Eighteen Blue A$2m convertible notes converted to shares • Direct Shipping Ore License permitting advanced during quarter
- Construction of the Kupang Smelting Facility currently in excess of 60% complete
- Mr Robert Ierace appointed as Chief Financial Officer and Company Secretary and Mr Tan Hwa Poh appointed Non-Executive Director
Gulf Manganese Corporation Limited (ASX: GMC) (“Gulf” or “the Company”) is pleased to provide shareholders with its Quarterly Activities Report for the period ended 31 December 2018.
Kupang Smelting Hub Project Overview
Gulf is focused on developing a ferromanganese smelting business in West Timor, Indonesia to produce and sell low carbon ferromanganese alloy. The Kupang Smelting Hub facility will contain at least eight furnaces built in stages over five years, targeting the production of a premium quality 78%+ manganese alloy.
At full production, Gulf will aim to purchase and process 320,000 tonnes of manganese ore per annum, producing circa 155,000 tonnes of premium quality ferromanganese alloy.
December Quarter Activity Overview
Kupang Smelting Hub Developments
Scopes of work for ancillary facilities including the laboratory, hazardous waste management, Health, Safety, Environmental and Security Centre as well as various employee amenity buildings have been finalised.
Further work to progress the Manganese Concentrate Export License for Direct Shipping Ore License, including the site visit, assessment and subsequent reporting by PT Surveyor Indonesia was completed.
The furnace building steel erection on site at the end of the quarter was 63.1% complete.
Corporate Activity Overview
Update on Cornerstone Investment
Post quarter end, Gulf advised that it had reached an agreement with Indonesian-based cornerstone investor PT Jayatama Tekno Sejahtera (“PT JTS”) and its subsidiary, PT Jayatama Global Investindo (“PT JGI”), to restructure the PT JTS debt facility and respective investments in Gulf and Gulf’s Indonesian subsidiary PT Gulf Mangan Grup (“GMG”).
PT JGI has agreed to restructure its existing A$6 million Convertible Note with GMG. The Convertible Note will convert into 25.1% of the issued share capital of GMG and an approximately A$5 million loan which will be repayable from the profits from commercial production of the Kupang Smelting Hub Facility. Post the conversion of the Convertible Note, Gulf will hold a 74.9% interest in GMG. As part of the restructure, PT JGI will receive a 2.5% net royalty on alloy sales from GMG’s first two smelters.
Final conversion of the PT JGI Convertible Note and subsequent issue of shares in GMG to PT JGI is subject to approval from the Indonesian Ministry of Energy and Mineral Resources (“MEMR”). GMG has already received approval from the Indonesian Department of Law and Human Rights and the Indonesian foreign investment regulator BKPM and expects to receive the MEMR approval shortly.
