India Resources achieves record copper production at Surda Mine

For the March 2010 quarter, India Resources (ASX: IRL) has reported revenues of $3.19 million.

Cash at the end of the quarter included the balance of a working capital overdraft facility of $2,914,000 which is used specifically for the day to day operations at the Surda copper mine.

Quarterly production at Surda was 838 tonnes of copper during the quarter, a record quarter since the commencement of the project, a 10% increase in copper production over the previous quarter. Ore milled was 4.3% higher than the last quarter and feed grade increased to 0.88% Cu compared 0.85% Cu last quarter.

Ongoing cost efficiencies and increases in copper production at Surda has resulted in a significant milestone, with the operation achieving an unaudited operating profit result, net of amortisation and depreciation charges, in recent months.

In Indian Rupee terms, the normalised revenue from Surda for the March 2010 quarter was the highest yet achieved (INR 123 million), and an approximate 20% improvement on the normalised revenue from the previous quarter (INR 102 million).

The new management team put in place at Surda has made progress in developing the lower side of the northern part of the mine which has the highest grade.

Continued improvement in production coupled with ongoing cost optimisation has resulted in Surda achieving a net operating profit result during the quarter.

The company expects production to increase further during the June quarter as the contribution from higher grade area increases.

In addition, increased hoisting tonnages are also forecast, due to upgrades in the winder and shaft being completed during the June quarter.

The Surda Copper Project has a JORC resource estimate of 13,095,000 tonnes of indicated and inferred resource at 1.09% Cu.

Work is ongoing to convert, in part, the resource into a reserve using detailed mapping, channel sampling and diamond drilling.

Surda Mine

Record copper production was achieved despite lower than expected tonnages and grade during the month of March 2010. The grade for January 2010 was 0.92% Cu, February 2010 was 0.89% Cu and March 2010 was 0.81% Cu while milled tonnes for the these months were 36,000, 33,000 and 35,000 tonnes respectively.

Production from a new block (B 19) commenced during the quarter. Preparatory work in Block 63 continued during the quarter with production during the current quarter.

New Projects

Biharinath Coal Project

A Letter of Intent was signed with Bankura DRI Mining Manufacturers Company Private Limited. Bankura is a special purpose corporate vehicle set up by six sponge iron manufacturers of the Bankura and Burdwan Districts to mine coal from the Anandapur Sector Biharinath block in the Raniganj Coalfield, located in the state of West Bengal, India.

The Biharinath block lies approximately 120 kms north north-east of the Surda Copper Project in the neighbouring state of West Bengal. It is located 10 kms south of Burnpur Steel City, across the Damodar River. The block is undeveloped and has been defined by 56 diamond drill holes for 27,000 metres of core.

Under the deal, Bankura and the India Resources have agreed to mine and supply coal to Bankura at a rate per tonne of coal loaded onto Bankura’s trucks. The agreement also provides for annual adjustments in prices reflecting variations in labour and other relevant indices.

Commercial terms agreed on the base price results in an IRR for the Company of 15%. The Company has made good progress in organising funding for this project and is now awaiting final government clearances to be obtained by Bankura, before making formal progress to close the financing.

Land has been purchased by Bankura for the decline shafts, mine offices and workshop areas and further discussions are underway for other areas like the vent shaft and accommodation sites.

Various funding options are being canvassed with some of the leading banks in India. Based on these discussions, the Company is confident that it will be able to raise sufficient working capital to fund site infrastructure requirements as part its obligations under the contract.

These funding options will be used in conjunction with surplus cash flows generated from the Surda project.

Future Prospects

The Company has identified an opportunity to develop another Coal Block and has submitted a tender during the current month. There are a number of other bidders and the final award is expected during the current quarter.

The coal block is owned by Prism Cement and requires approx 300,000 tonnes per annum of coal to be mined once two declines and a vertical ventilation shaft have been sunk.

The Company is also investigating further opportunities in the copper sector of India. Pre Qualification of these projects is expected to take place during the current calendar year.

Aravalli Project – Base Metals

The Company is in joint venture with RBG Minerals Industries Ltd (RBG), a subsidiary of Binani Zinc Limited, a large Indian conglomerate.

RBG is investing 5.144 crore Rupees (US$1.1 million) to earn up to a 51% interest in IRL’s subsidiary, Crown Mining Pvt. Ltd. Currently, RBG is assisting the grant process of the Mining Lease (ML) applied for over the lead-zinc mineralisation defined at Sindesar Khurd-Rajpura Dariba with plans for further drilling towards JORC resource status.

Corporate

The Company is improving the strength of its balance sheet with increased revenue flows from Surda and a reduction in debt in 2010.

IRL also expects to receive approximately $3.1 million from Swan Gold in three instalments up to February 2011, following the Deed of Company Arrangement for Monarch Gold Mining Company.