Shares on issue ~132M
Options ~17M
Share price $0.115
Market capitalisation* ~$15m
Cash $3.0m (March 2012) - plus $2.24m from cap raise in May - less costs from June quarter.
Substantial Holders
Coalworks 33.3%
Board and Management 10.5%
Paul Fillion 7.2%
Orpheus Directors
Wayne Mitchell
AASA, AAIM (Chairman)
Mr Mitchell is a qualified accountant with over 30 years extensive senior management experience in the natural resources sector, both in Australia and in South East Asia.
David Smith
B Econ, Dip Mgmt - Executive MBA (Executive Director)
Mr Smith was previously an investment banker for 15 years, where he advised and raised capital in a range of industries, and particularly for emerging coal and iron ore companies. He was most recently Head of Corporate Finance at BBY Limited and prior to that, he worked at Ord Minnett and then JPMorgan Chase.
Wesley Harder
BSc. Dip SIA. MAusIMM.(Director, Exploration Manager)
Mr. Harder is a former coal analyst with Jackson Ltd stockbrokers. He has also worked as a field exploration geologist for fifteen years in Australia and its near neighbours.
Tony King B Sc. BA. (Non-Executive Director) Mr King is a professional Metallurgist and qualified geologist with over 20 years operational and technical experience within the resource industry. He has also been involved in design and construction of coal washing plants and has participated in a wide variety of resource projects.
Orpheus Energy Limited is a coal company focusing on coal production and exploration in Indonesia. OEG also owns some Australian coal and industrial minerals projects. Orpheus has signed a strategic alliance with PT Mega Coal International which is an existing coal producer and exporter. Orpheus is on a fast track to growth, through increasing production at the recently acquired ADK project, moving its B26/34 projects into production, definitive exploration programmes at the Papua project and acquiring near term production assets.
About PT Mega Coal
PT Mega Coal is a privately-held coal mining company with an extensive local network and mining experience in Indonesia. OEG has an existing strategic alliance with PT Mega Coal, notably including its joint ventures for ADK, B26/B34 and Papua. The strategic alliance with PT Mega Coal enables the opportunity for continued additional coal concessions in Indonesia.
ORPHEUS STRENGTHENS REVENUE STREAM WITH NEW ROYALTY AGREEMENT AT THE B2 COAL PROJECT
● PT Debbia Mining to pay Orpheus US$8 per tonne on all coal sales
● Orpheus not responsible for any capital, operating or marketing expenses
● B2 targeting production of 30,000t per month
● Expected to recommence production in August
Orpheus Energy is pleased to advise that it has executed a life of mine Royalty Agreement with Indonesian mining contractor PT Debbia Mining, whereby OEG will receive US$8 per tonne on all coal sales at its 51% owned B2 project in East Kalimantan, Indonesia.
After a lengthy assessment on how B2 would optimally resume production, it was determined that the most cost efficient, lowest risk and profitable strategy would be to appoint a competent mining contractor, proficient in thin seam mining, under a royalty payment arrangement. Orpheus is not responsible for any capital, operating or coal marketing expenses under this arrangement.
The mining contractor is currently undertaking some additional pre-drilling to finalise the mine plan and will shortly start mobilizing mining equipment at site. The target production rate is 30,000 tonnes per month (360,000 tonnes per year) and B2 is expected to re-commence production in August.
The current JORC Coal resource at the B2 project of 0.95Mt indicated and 0.18Mt inferred will provide an initial mine life of approximately three years. Exploration programs soon to be undertaken at the adjacent B6 project (an exploration target of 1.5Mt to 2.5Mt and calorific value of 5,950 to 6,850 kcal/kg*) and nearby B34 project (an exploration target of 5Mt to 10Mt and calorific value of 7,200 to 8,100 kcal/kg*), approximately 60 km west, will delineate additional resources to continue mining in this area.
Executive Chairman Wayne Mitchell said,
“We are pleased to enter into this agreement with an experienced mining contractor. We can now recommence production at B2, and the royalty arrangement means the company assumes no financial risk with the royalty going straight to Orpheus’ bottom line.”
“This development progresses our Indonesian coal strategy of rapidly ramping up production in Kalimantan. Together with our Kintap ADK project, which is currently producing 50,000 tonnes per month, Orpheus will soon be producing at the rate of 80,000 tonnes per month (net 40,000 tonnes to Orpheus) once B2 resumes mining.
“The next step for us is to bring additional Kintap area satellite mines into production and we look forward to updating shareholders on developments”
Why Indonesia ?
*Indonesia and Australia remain the key players in the export coal market.
*Indonesia has been the fastest growing exporter, overtaking Australia as the largest supplier to the global seaborne market in 2005.
*China plans to add 1TW new coal-fired power plants by the end of 2020, triple the size of its total capacity from the current 650GW.
*Demand visibility from India is also strong as with plans to add 100GW of power plants over the next five years.
*India is even more relevant to Indonesia’s exports since its imports the bulk of its total coal from Indonesia. *The Indonesian coal sector has risen 12% in Q1 2012 to outperform the Jakarta Composite Index
Kintap ADK Project
•In March 2012, Orpheus secured a 50% interest in Orpheus’s JV partner PT Mega Coal’s ADK operating coal mine located in South Kalimantan, Indonesia
•The joint venture provides that OEG will earn 50% of net profits of ADK’s coal mine operations.
•Minimum A$15 per tonne cash profit margin targeted
•In April 2012, Orpheus shipped approximately 28,000 tonnes of ADK thermal coal
•Existing infrastructure in place – port allocation secured via two separate ports – PCMU and SSDK - ~15km away loaded onto barges for shipment
•Exploration programme ongoing with JORC resource drilling underway
•Coal mined from the ADK mine to date has an average calorific value of 5400 Kcal/Kg (ADB), and is low in ash (6%) and sulphur (0.4%).
B26 Project
B26/B34 project comprises two areas, B26 and B34.
•B26 is located in East Kalimantan, ~100km from Balikpapan and has a total exploration target of 2.8Mt to 4.5Mt* of high grade thermal coal with some coking coal potential (current JORC Resource of 1.13Mt).
•Port allocation, ~27km away, has been secured. Haul road improvements to facilitate streamlined truck movements are almost completed.
•Part of B26 has already had trial mining in 2011 and the next stage mine plan has been developed by Minarco Mine Consult:
4 potential mine pits for up to 246,000 tonnes
Target production rate of 30,000 tonnes per month
Target SSCC / thermal coal split of 15% / 85%
Target strip ratio of 15:1
45o of overall highwall slope, to generate the pit shells, situated to the north and south of the previously trial mined area.
Sales offtake agreement currently being negotiated to reflect current prices.
Mining contractor about to be appointed and PRODUCTION IS EXPECTED TO RECOMMENCE Q2 2012
B34 Project
•B34 is located ~60km west of B26 and it is ultimately planned to be mined using the same road/port infrastructure.
•B34 has an exploration target of 5-10 Mt of coal and target calorific value of 7200 to 8100 Kcal/kg*.
•Drilling program is planned for Q4 2012 to establish a JORC resource. B34 has had historical geological mapping and reported the following high quality coal samples:
B3: low ash (1.5%); low total moisture (8.3% ar); energy content of 7,123Kcal/kg.
B4: low ash (1.9%); low total moisture (6.5% ar); energy content of 7,235Kcal/kg.
•Following conversion of B34 Exploration KPs into Exploitation IUPs, scheduled for Q4 2012, mining from B34 is planned to double OEG’s total production out of the area.
Papua Project
•Highly prospective greenfield exploration area located within 40km of the coast in Papua.
•Coal outcrops throughout the tenement area
•Field Exploration and drilling program to commence in Q2 2012
Additional Indonesian Projects
•Orpheus has progressed plans to expand the Strategic Alliance with PT Mega Coal with an ongoing acquisition program underway.
•A number of projects have been identified for possible acquisition located in the Kintap area of South Kalimantan.
All have good infrastructure including good proximity to barge loaders or appropriate port sites and transport options.
•The framework has been developed to allow completion of the following activities:
Technical review of each project;
Memorandum of Understanding with each owner;
Term Sheet for Orpheus Participation; and
Completion of legal due diligence.
Australian Projects
Hodgson Vale
•Project is located in SE Queensland in proximity to other producing coal mines
•Past drilling shows coal measures exist in the EPC with medium grade export quality coal potential
•Drilling is planned later in 2012 to explore for coal in the southern zone of EPC 1145
Ashford
•Past drilling shows potential for chemical grade Ground Calcium Carbonate (GCC)
•Orpheus proposes to outline zones of high quality limestone suitable for GCC
•Exploration target of 30-40 Mt* of high quality ground calcium carbonate (with target white rating index of 89 91%)
•Drilling is planned in Q2 2012 to delineate a JORC resource
Wingen
•Project lies just north of Unimin’s operating bentonite mine.
•Past work shows potential for high quality bentonite
•Orpheus’s joint venture partner has previously located outcropping bentonite on EL7142
•Existing granted EL7124 has been extended by ELA 3657
•A drilling program is scheduled to commence in Q2 2012 to delineate a JORC resource
•OEG not affected by the recent legislative changes by the Indonesian government concerning foreign ownership
Revenue, experienced directors, aggressive expansion, major partner, small cap, cash in hand, substantial news flow for rest of year.
This is going in my low cap, low liquidity thread.