T

in miner PT Timah (TINS) is set to begin tin ore exploration in Myanmar in June, marking the start of the company'€™s expansion in the Southeast Asian country.

Timah president director Sukrisno said Tuesday that the company was close to obtaining its mining site recommendation. '€œWe have already obtained forestry- and agriculture-related recommendations. Hopefully we will secure the site recommendation this month, so that we can begin the exploration in June,'€ he said.

As previously reported, publicly listed Timah, in which the state has a majority holding, has secured a 10,000-hectare tin concession area in Pubyien-Tamok, Tanihary, Myanmar. The area is estimated to have around 10,000 tons of tin reserves.

The exploration process was expected to take six months and Timah was scheduled to enter the production stage in early 2015, Sukrisno said. He added that Timah had also submitted additional mining applications in other areas of Myanmar and was hoping to obtain the permits this year.

Timah will begin constructing a smelter in Myanmar in 2014 as well, with an investment of Rp 150 billion (US$12.25 million). Timah will use its internal funds to finance the construction.

'€œThe smelter construction will run concurrently with the exploration. Besides processing our tin ore in the future, the smelter will also be used to process ore from local mines,'€ he said.

Meanwhile, Sukrisno said that Timah would focus on upgrading its existing equipment and expanding the shipyard, which is operated by subsidiary PT Dok & Perkapalan Air Kantung, as part of its business plan in 2014. The company has allocated about Rp 1.4 trillion for capital expenditure.

The company has set its production target at 28,000 to 30,000 tons in 2014, around the same level that was reached last year. However, Timah is optimistic that it will book higher revenues, backed by an improving average selling price (ASP).

Following the implementation of a trade ministerial regulation, which stipulates that tin exports must go through the Indonesia Commodity and Derivatives Exchange (ICDX), Timah has seen its ASP climb to $23,000 per metric ton from the previous $19,000 per metric ton.

Provided that the ASP stays at around the same level, the company is estimated to generate at least
Rp 7.89 trillion in revenues, excluding those booked by its subsidiaries. The figure will be 17.7 percent higher than the Rp 6.7 trillion posted in 2013, according to its unaudited financial report.

In its bottom line, Timah hopes to see its net profits rise by at least 20 percent to exceed Rp 517 billion, supported by efficiencies, including in energy expenses. At the moment, energy accounts for 14 percent of its production costs.

'€œWe have signed a memorandum of understanding on electricity provision with [state-run power firm] PT PLN. It will provide us with as many as 30 megawatts of electricity in 2015, so that we can shift our energy use from generators,'€ he said.

Timah is slated to publish its 2013 audited report in mid-February. Data from the Indonesia Stock Exchange (IDX) show that the company'€™s shares ended at Rp 1,275 apiece on Tuesday, down 1.2 percent from a day before.