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Timah to issue Rp1.5t in bonds to boost production
State-owned tin mining company PT Timah plans to issue conventional bonds worth Rp 1
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tate-owned tin mining company PT Timah plans to issue conventional bonds worth Rp 1.2 trillion (US$89.9 million) and sukuk (sharia compliant bonds) worth Rp 300 billion to boost its mining and refinery activities and refinance some of its debts.
Timah plans to use 70 percent of the proceeds for capital expenditure to increase its production capacity, including by procuring a cutter-suction dredger (KIP) for offshore mining activities, developing new processing facilities, boosting exploration and opening new onshore mining sites.
“All of these business actions need financing. That’s why we want to issue the bonds,” Timah president director Riza Pahlevi Tabrani said on Thursday, adding that 30 percent of the proceeds from the bond issuance would be used to refinance some of the company’s debts.
It will be the first part of Timah’s bond and sukuk issuance plan under the shelf registration approved by the Financial Services Authority (OJK), which is expected to collect a total of Rp 2.1 trillion and Rp 700 billion respectively.
For the first issuance, Timah expects to get the effective statement on Sept. 18, so that the bonds can be offered in the period of Sept. 20 to 25.
Each of the bonds will consist of two series. The A series will mature after three years with an annual coupon rate of between 8.5 percent and 9 percent, while the B series will be due after five years and offer an annual rate of 8.75 percent to 9.25 percent.
As of March, Timah had 752,644 tons of tin resources and 323,618 tons of reserves, with a lifespan of around 20 years and 10 years, respectively. Timah aims to produce 30,000 to 33,000 tons of tin this year, up from 25,000 tons last year.
However, Riza said Timah’s alluvial tin deposits had started thinning out, forcing the company to start exploring its primary deposits that contain ores with lower tin content.
To process such low-grade ores, Timah needs a new smelter using state-of-the-art technologies, particularly ones developed by Australia-based furnace system provider Ausmelt, in Muntok, Bangka Belitung. The new facility, which has an investment value of Rp 550 billion, will be able to produce 45,000 tons of tin a year once it is completed in 2020.
The company is also constructing a new fuming plant worth Rp 60 billion in Muntok, expected to commence operations in the second half of 2018.
Timah has set aside Rp 2.3 trillion for capital expenditure in 2017, 40 percent of which has been utilized as of today. As of March, Timah’s total liabilities had reached Rp 4.3 trillion, up 20.58 percent on the year.
From Aug. 18 to 24, Timah’s share price jumped by 12.27 percent to Rp 915 apiece, following a decision by Bangka Belitung Governor Erzaldi Rosman Djohan to issue a moratorium on tin mining licenses for the next two or three months to curb illegal mining activities.
