Adaro acquires 75% of Mustika Indah for US$222.5m

PT Adaro Energy Tbk announced on Tuesday that on August 19th, 2011, PT Alam Tri Abadi, a wholly owned subsidiary of PT Adaro Energy Tbk, signed a share purchase agreement to acquire a 75 percent stake of PT Mustika Indah Permai from Elite Rich Investment Limited for US$222.5 million.

Mustika Indah is a coal mining company developing a greenfield coal project in South Sumatra. Mustika Indah holds a mining permit, known in Indonesian as an IUP, which was granted in April 2010 for a period of twenty years.

The project covers an area of approximately 2,000 hectares.

"Our investment in Mustika Indah is part of our drive to create sustainable value from Indonesian coal and achieve our vision to become a leading Indonesian mining and energy group,? said Adaro Energy?s President Director, Garibaldi Thohir.

He said Mustika Indah is one of a number of acquisition opportunities that, together with organic growth, will help Adaro Energy to achieve 80 million tonnes of production in the medium term.

Adaro Energy?s advisors and engineers visited the area in November 2010 and subsequently carried out a geological and drilling program. Following these and other detailed studies, Adaro Energy decided to pursue a majority ownership in Mustika Indah.

Adaro Energy said it has evaluated the geological information available for Mustika Indah and considers that there is significant open cut coal mining potential.

It said the coal geology at Mustika Indah was sufficiently uniform.

The structure, thickness and quality of the coal seams were considered well enough defined by the density of drill holes that Adaro was confident to proceed with the purchase of this potential coal area, even though some incremental technical work is still required before an official statement of Coal Resources and Reserves can be made. (roffie)