A man stands in front of a wall screen showing stock prices at the Indonesia Stock Exchange building in Jakarta on Oct 23, 2020. (Antara Photo/Hafidz Mubarak A.)

Merdeka Copper to Build a New Plant with China's Tsingshan, Plans Shares Buyback


MAY 27, 2021

Jakarta. Merdeka Copper Gold, a listed gold and copper miner, has earmarked $290 million to construct an acid, iron, metal, or AIM plant this year as part of a joint venture with China's metal giant Eternal Tsingshan Group.

Merdeka Copper Gold and Eternal Tsingshan established the joint venture recently, with the former controlling 80 percent of the company, Simon James Milroy, Merdeka Copper Gold's vice president director, said on Tuesday. 


Milroy said the AIM project would start construction in the second quarter of 2021 and start production in the fourth quarter of 2022.

Merdeka Copper Gold expected the new plant would increase the company's revenue to $170 million per year for more than 20 years, Milroy said. He said the project had a net present value (NPV) of $407 million, based on an 8 percent discount rate and an internal rate of return (IRR) of 26 percent. 

Merdeka Copper Gold also continues the pre-feasibility study for the Tujuh Bukit copper project, which contains inferred resources of 8.7 million tons of copper and 28 million ounces of gold.

The company said it hoped the Tujuh Bukit project return to normal in the third quarter this year after a heap leach fracture incident halted production in September last year. That would boost consolidated income, earnings before interest, tax, depreciation and amortization (EBITDA), and profit in 2021, on top of copper production from the Wetar Copper Mine, Milroy said. 

This year, the company targets to produce 100,000 to 120,000 ounces of gold and 14,000 to 17,000 tons of copper.

Merdeka Copper Gold produced 16,585 ounces of gold and 2,489 tons of copper in the January to March period this year, increasing from 5,355 ounces of gold and 1,017 tons of copper in the fourth quarter last year, thanks to progress at the leach pad in Tujuh Bukit and rising production at the Wetar copper mine.

The company managed to book revenue of $46.6 million. Its asset grew to $1.16 billion from $929.61 million in March 2020.

Share Buyback

Merdeka Copper Gold's general meeting of shareholders ( GMS) on Tuesday also approved a plan to buy back as much as 1 percent of the company's shares floated the market, allocating up to Rp 530 billion ($37 million) from the plan. 

The company would carry out the buyback over the next 18 months, corporate secretary Adi Adriansyah Sjoekri said. Adi said the buyback aimed at maintaining the company's stock price stability, which did not reflect its true value. 

"In addition, share buybacks are carried out in the context of implementing a long-term incentive (LTI) program for employees, directors, boards of commissioners, and subsidiaries to spur performance," he said. 

Merdeka Copper Gold opened 0.3 percent higher at Rp 2,560 apiece on Indonesia Stock Exchange on Thursday, trading at 299 times of its earnings in the past four quarters.