A Jakarta billionaire known as the “coal king” has bought a 20 per cent stake in Gulf Manganese for $10.8 million.

Mr Bapak TK Low, founder and majority owner of Indonesian coal group Bayan Resources, has agreed to buy 714 million shares at 1.5c each.

Prior to today’s announcement, Gulf Manganese (ASX:GMC) shares had doubled this month to 2.2c. The stock was up to 2.3c in opening Tuesday trade.

Gulf has just passed the halfway point on construction of Indonesia’s first ferro-manganese smelter, which it expects to commission before the end of this year.

About 90 per cent of manganese goes into steel-making and Gulf will be producing ferro-manganese – a ferro-alloy with a high content of manganese used to deoxidize steel.

Mr Bapak TK Low’s Bayan Group operates coal mines on the Indonesian island of Kalimantan and also owns the biggest coal terminal in Indonesia.

Along with the shares he will get 714 million options exercisable at 0.5c by April 2019.

The deal is subject to a shareholder vote expected in six weeks.

The money will go towards development of Gulf’s smelting hub, acquisition of mining licences and general working capital.

Gulf Manganese shares (ASX:GMC) have more than doubled this month.
Gulf Manganese shares (ASX:GMC) have more than doubled this month.

“To have secured the support of Bapak Dato Dr Low Tuck Kwong, a major mining operator in Indonesia is an excellent endorsement of the Gulf Manganese Project in Kupang, Indonesia,” said Gulf boss Hamish Bohannan.

“This is a very good outcome for Gulf and another building block in our goal to build an integrated manganese mining, processing and smelting operation.

“With funding now in place, we are focused on three key objectives: the commissioning of our smelters safely, on time and on budget, acquiring a financial interest in producing manganese mines in East Nusa Tenggara and securing a Direct Shipping Ore export licence.

(DSO typically requires only simple crushing before it is exported, which keeps costs low.)

Mr Bohannan told Stockhead earlier this month that he had signed “19 agreements with local miners to take their ore off them and we’re well down the track on the acquisition trail for a couple of mines in our own name”.

Gulf Manganese already has 60 per cent of its planned 40,000-tonnes-per-annum of ferromanganese production locked up in a supply deal with South Africa’s Transalloys.

The company is also in talks with several other major players about taking the remaining ferromanganese.

“We’ve now come out and had our debutante’s ball so to speak and people realise that we are going to be out there producing some of the best ferromanganese in the market.”