On 19th February 2020, Merdeka announced that MDKA entered into a memorandum of understanding (“MOU”) with Eternal Tsingshan Group Limited (“Tsingshan”) in relation to a new Joint Venture (“JV”) that will develop a plant to process ore from Merdeka’s Wetar mine.

The ore at Wetar is primarily pyrite (FeS2) which hosts copper, gold, silver and zinc. Over the past year, Merdeka has investigated opportunities to realize additional value from the Wetar ore, as the existing process at Wetar only recovers a portion of the copper and does not recover any of the gold, silver, zinc, iron and sulphur (a component of chemical grade sulphuric acid) contained in the ore.

As part of this initiative, Merdeka has worked with Eternal Tsingshan Group Limited (“Tsingshan”) to conduct metallurgical test work on the Wetar ore as well as developing a preliminary process flowsheet.

Tsingshan is involved in a number of projects which have been and are being developed at the Indonesia Morowali Industrial Park (“IMIP”) located in Sulawesi, Indonesia. Some of these projects will require large amounts of sulphuric acid and steam in their production process.

As a result of the positive test results to date, Merdeka and Tsingshan are sufficiently confident with the process that they have now entered into a MOU to develop a plant to undertake the processing of the Wetar ore (“Pyrite Processing Plant”) which will be located at IMIP.

The feedstock will come from ore currently located on the heap leach pads at Wetar and from the current and planned open pit operations at Wetar. There is sufficient inventory of feedstock at Wetar to maintain long term operations of the JV.

Resource estimation work to define resources is expected to be completed in 2020 as part of feasibility work for the project. Based on existing heap inventories and unmined resources, management is confident that it can define sufficient resources to support a 10-year mine life at 2 million tonnes of ore per annum. Significant potential for new discovery also exists as evidenced by the definition of the Partolang resource during 2020.

The feedstock will be loaded onto vessels at Wetar for sea transportation to IMIP, a distance of approximately 700 km.

Metallurgical test work for the proposed Pyrite Processing Plant has been undertaken at ALS Global’s Perth laboratory, as well as the laboratory of the Beijing General Research Institute of Mining and Metallurgy (BGRIMM). A conceptual study, managed by Fluor Australia, was completed in April 2020. During Q1 2021, the AIM Project feasibility study was finalised and subsequently announced in April 2021. Based on a capital cost estimate of US$ 290m, the AIM Project will deliver compelling economics, with a Net Present Value (“NPV”) of US$ 407m at 8% discount rate and an Internal Rate of Return (“IRR”) of 26%. Significant growth in acid demand is expected as additional HPAL plants are planned to be constructed in Indonesia. The AIM Project will begin construction in Q2 2021 and is targeted to deliver first acid in Q4 2022.

For more information about Wetar AIM Project, kindly read “ April 2021 - Completion of FS for the AIM Project“, “ February 2021 - Signing of AIM JV and CSPA to Acquire Posco's Interest in Wetar“.