Kupang Resources Limited is pleased to announce that the Kupang Joint Venture has entered into a letter of intent with the Manganese Society of Kupang in relation to the supply of high grade manganese ore to its Kupang project in West Timor, Indonesia. The Kupang Joint Venture has also completed the acquisition of a process plant  with the capacity to produce up to 30,000 tonnes per month of Manganese lump product suitable for direct feed into Ferro- or Silico-Manganese smelters per month. The Processing Plant is now mobilised and located at the Kupang Project (in which the Company has a 55% interest) and will be used to process the high grade ore acquired pursuant to the Supply Agreement. The Processing Plant was acquired for approximately AUD$1,500,000.

The Mn Society represents the interests of local manganese miners in Kupang and is currently comprised of 52 members. Pursuant to the Supply Agreement, the Mn Society will, on a best endeavours basis, undertake to procure the supply of a minimum of 30,000 tonnes of raw high grade ore per month to the Kupang Joint Venture. It is anticipated that the Mn Society will commence supply of raw grade ore to the Joint Venture in January 2013. The ore will be acquired by the Kupang Joint Venture for fair consideration. Detailed specification of the ore and other governing terms and conditions are to be set out in a formal agreement to be entered between the parties.

As previously announced, representative sampling analysis results of the local product show impressive grade in excess of 85% Manganese oxide (MnO2). These previously announced raw sampled grades indicated the following grades: Manganese 55% (MnO2 86%) Iron (Fe) 0.9% Alumina (Al2O3) 1.4% Phosphorus (P) 0.07%.
It is planned to collect a further sample, split it and have duplicate analyses conducted at a specialist metallurgical laboratory in Perth, Western Australia and at the current laboratory in Jakarta to provide confidence in the skills and experience in the Indonesian systems and processes.

The manganese ore to be supplied by the Mn Society will be processed through the plant to size and upgrade the ore to enable a product of consistent grade which is capable of being bulk direct shipped to the markets. The key for customers of MnO2 products is low variability of both the Manganese content and the percentage of accompanying deleterious elements including Iron (Fe), Aluminium (Al), Silica (Si) and Phosphorus (P). One of the key features of the raw ore to be supplied to the Kupang Joint Venture by the Mn Society is its very high Manganese content, combined with low levels of value eroding elements Fe, Al, Si and P.

To measure the value of the product being purchased pursuant to the Supply Agreement, systems have been acquired and mobilised to the Kupang Project site to accurately analyse, weigh and measure material delivered to and processed through the Process Plant. The ancillary equipment required to manage the material handling stream includes an analytical laboratory and a mechanism to accurately weigh the delivered product.

The execution of the Supply Agreement and acquisition of the Processing Plant (and ancillary equipment) provides the Joint Venture with the capacity to produce a high end Manganese product on site. This supply and processing ability together with the land to be acquired by the Company (refer to announcement dated 19 November 2012) which includes a granted production license, positions the Kupang Joint Venture in an excellent position to commence production and export of manganese in the near term.

Commenting on the Supply Agreement and Processing Plant Executive Director Mr Tony Sage said "Kupang Resources is pleased to announce the achievement of these major milestones by the Joint Venture which strongly indicates the potential of the Kupang Project to deliver production in the near term is now realisable. We are now focussing on finalising an agreement to export the ore from Kupang.”