INTERVIEW-UPDATE 1-Thai Tongkah to buy Indonesian tin mine in H1

Published: 22 Apr 2009 02:24:06 PST

* To clinch a purchase of Indonesian tin mine in H1

* To conclude new investments in Vietnam this year

* Beefing up capacity expansions to tap rising demand

BANGKOK, April 22 - Thailand's second-biggest gold miner, Tongkah Harbour PCL <THL.BK>, expects to complete the purchase of a tin mine in Indonesia by the middle of this year as it extends capacity, its managing director said.

The company was also in talks on new investments in its core businesses in Vietnam, including the acquisition of a gold mine, and aimed to conclude some of those deals this year, Ronald Ng Wai-Choi said in an interview with Reuters.

The mine in Kalimantan on Borneo island will yield minerals including gold and zircon, but mainly tin.

It had cash of about 500 million baht ($14 million), enough for it to fund the acquisition of the mine alone, but it would seek overseas corporate partners and sell some of its property in Thailand to free up some cash, Ng said.

"We're working on the acquisition price of the (Indonesian) plant," he said. "We hope to finalise this by the middle of this year."

Tongkah runs mining operations in Loei and Saraburi provinces in Thailand. Its other business involves property management, including the planned development of an office and serviced apartment complex in central Bangkok.

The company was hopeful the government would expedite the granting of more mining licences in Thailand after long delays.

"We're applying for another 98 mining pits in Loei. Three of them we can develop very quickly, which can treble our production," he said.

The company was looking for opportunities to expand in Laos, Myanmar, Cambodia, Papua New Guinea and the Philippines, although it has delayed talks on buying a gold mine in the Philippines.

PLANT UPGRADE

Tongkah was upgrading its plant capacity in Loei to increase mineral output, mainly gold, which was due for completion in the first half of this year, Ng said.

With the new capacity, its monthly gold production would increase to over 3,000 ounces from 2,500, he said.

Tongkah has a $35 million loan with Deutsche Bank <DBKGn.DE> under a four-year contract ending in 2012 and makes repayments in gold. In the year from March, it is to give the bank 2,500 ounces of gold each month at an agreed price of $825 per ounce.

Gold contributed about 90 percent of its revenue in 2008, when the company made a net profit of 112 million baht, after a loss of 148 million baht a year earlier. Its average selling price for gold was $839 an ounce last year, Ng said.

Gold <XAU=> was trading at $884.20 an ounce at 0612 GMT. [GOL/]

New investments in tin and gold mines are necessary to meet future demand, Ng said, adding: "We expect a good cash inflow from operations on top of our current cash. This will help with our acquisition of more and more resources."

"In the early part of last year, the cost of production was high and that has dropped drastically because of falling commodity prices," he said.

Tracking the gold price, Tongkah shares have surged 25 percent this year, outperforming a 2.6 percent rise in the broad index <.SETI>. On Wednesday, the shares fell 0.7 percent to 1.36 baht, while the main index <.SETI> dropped 1.2 percent. ($1=35.58 Baht)