Merdeka Copper Focuses on Ramping Up Production

Jakarta. Mining giant Merdeka Copper Gold (MDKA) focuses on ramping up production in the second quarter of 2023 after it paid off the principal and the 12th interest payment of the 2020 Merdeka Copper Gold Phase I Sustainable Bonds Series B on July 30. This payment was due on July 30 with a fixed interest rate of 10.5 percent annually.

The company said in a statement on Friday that gold production from the Tujuh Bukit mine in Banyuwangi stood at 38,447 ounces as of the second quarter of 2033 with an all-in-sustaining cost of $1,060/oz. Production in the first half of 2023 is on track to meet the target of 120,000-140,000 ounces of gold at an AISC of US$ 1,100-1,300/oz after deducting silver yields.

Merdeka also saw 20 million hours without lost time injury as of July 2023 and identified expansions of the mineralization of its currently operating mines along with targets within the concession area to further boost the resource and life of the mine.

Managed by subsidiary Bumi Suksesindo (BSI), the Tujuh Bukit gold mine is an open pit mine in Banyuwangi, East Java, which digs mineral ore and extracts gold and silver deposits, using an efficient leaching method. Operations are based on the permit that the company has secured since 2012. The land under the permit spans 4,998 hectares over a production forest in Sumberagung village, Banyuwangi. BSI only uses 992 hectares out of 4,998 hectares for its mining operations.

Launched in 2014, Tujuh Bukit mined its first ore in 2016 and produced its first ore the following year. It has become one of Indonesia's largest mines.

In 2016, the Tujuh Bukit Gold Mine was designated as a national vital object for the quality of its mineral resources which is recognized by the state as a strategic asset.

Meanwhile, Merdeka's Wetar Copper Mine produced 3,128 tonnes of copper at a sustainable cost (AISC) of $ 4.91/lb in the second quarter of 2023. The production is expected to increase in the second half as additional ore will help meet the 2023 target of 16,000-20,000 tonnes of copper. The mine maximizes the value of its pyrite ore for further processing at the AIM (acid, iron, metal) project for the production of acid, steam, copper, iron ore pellets, gold, and silver. The planned delivery of pyrite ore to the AIM project, which is scheduled for the second half of 2023, will further increase the source of revenue for the Wetar Copper Mine.

The Wetar Copper Mine is the only mine in Indonesia that directly produces and exports copper cathodes. This mine is managed by PT Batutua Kharisma Permai as the holder of a copper production operation mining business license and PT Batutua Tembaga Raya as the holder of a special production operation mining business license for processing and refining mining products into copper cathodes.

The two companies (BKP-BTR) have become part of Merdeka Copper Gold since 2018 through the acquisition of Eastern Field Developments Limited, the majority shareholder of Finders Resource, an Australian mining company that previously managed BKP-BTR. The Wetar Copper Mine is located on Wetar Island, Southwest Maluku, and occupies an operating area of ​​2,733 hectares, around 1.07 percent of Wetar Island which has an area of ​​262,235 hectares.

Merdeka's subsidiary Merdeka Battery Materials (MBMA) debuted at the Indonesian Stock Exchange in April 2023 and raised Rp 9.2 trillion ($600 million) to strengthen its position to maximize the value of its asset portfolio by developing downstream expansion projects in the electric vehicle (EV) value chain.

In the second quarter of 2023, MBMA completed the acquisition of a 60 percent interest in PT Huaneng Metal Industry (HNMI), a high-grade nickel matte conversion facility (HGNM), located at IMIP (Indonesia Morowali Industrial Park) and produced its first nickel matte.

MBMA also successfully commissioned the third RKEF (Rotary Klin-Electric Furnace) plant, ZHN with an installed capacity of 50,000 tons, which will double MBMA's NPI (nickel pig iron) production to 88,000 tons of NPI per year.

MBMA's Sulawesi Cahaya Mineral (SCM), one of the world's largest nickel deposits, will begin delivering ores to the RKEF smelter in IMIP. First acid production is slated for Q4.

Emas Pani ProjectMerdeka is currently developing the Emas Pani project which will become one of the largest primary gold mines in Indonesia, producing up to 450,000 ounces of gold per year. Pani, located in Gorontalo, Sulawesi, contains 6.63 million ounces of gold with potential for further resource development.

In the second quarter, drilling results consistently demonstrated continuity of mineralization, increasing confidence in the amount of the resource and the potential for expansion of the resource area. MDKA is also advancing project development work and feasibility study work, which is targeted for completion in the 4th quarter.

The results of the pre-feasibility study (PFS) of the Seven Bukit Copper project announced in the second quarter demonstrated the project's potential to become a world-class long-lived underground mine, with a total production capacity of 24 million tons of ore per year and a maximum production capacity of 112,000 tons of copper and 366 thousand ounces of gold in concentrate per year. PFS is based on 404 million tons of resources from the 1.7 billion tons project.

Based on these positive results, Merdeka is developing a feasibility study (FS) that will increase the project's level of accuracy and detail by 2024.

The Tujuh Bukit Copper Project has resources of 1.71 billion tons of ore at 0.47 percent Cu and 0.50 g/t Au containing approximately 8.1 million tons of copper and 27.4 million ounces of gold, including indicated resources of 442 million tons at 0.60 percent Cu and 0.66 g/t Au. Based on the PFS, Merdeka is expected to invest around $757 million for the development of the first phase of the project using the Sub-Level Cave (SLC) method.

In 2023, the Merdeka Group plans to invest to fund the growth and further development of several future projects such as the pre-construction of the Emas Pani project, completion of the FS of the Seven Bukit Copper Mine project, and completion of the Wetar Barge Jetty for the delivery of pyrite ore for the AIM project, increasing activity mining at the SCM Mine, completion of construction and transition to operational readiness at the AIM project and capacity increase at the ZHN smelter to 50,000 tons of nickel in BOP per year.

Currently, Merdeka is in the process of transitioning from operating two short-term, low-cost mines to several long-lived world-class mines, as well as a number of business portfolios including the EV battery value chain.