Asia Resources reconsiders Indonesian operation

By Romel S. Gurky

Hong Kong-listed firm Asia Resources Holdings Limited recently stated it is in the course of revising the overall business plan with regards to its mining operation in Indonesia carried out by subsidiary PT Dampar Golden International.

Dampar Golden International (DGI), an indirect non wholly-owned subsidiary of the company with 55% shares owned by Mighty Kingdom Investments Limited, a wholly-owned subsidiary of the company, 40% by PT Indo Modern Mining Sejahtera (Indo) and 5% by Empire Bridge Assets Limited, has on September 12, 2009 signed a Deed of Statement and Power of Attorney, followed by service agreement dated 26 March 2010 with Indo and been granted exclusive powers and authorities to manage and arrange all activities in Indo's mining area located in Lumajang, East Java, Indonesia and covering a site area of at least 1,195 hectares. In view of the deal, DGI is to receive a fee equal to the full amount of the net profits of Indo deriving from all the mining activities within the concession, ranging from procurement/arranger services at the minimum to sale and exporting services in the mining area.

Asia Resources, aware that the laws governing mining industry in Indonesia have recently been amended and modified, was advised by its Indonesia legal advisers about the major impact of the amendments, including all the raw mineral output in form of ore cannot be directly exported after 6 May 2012, and all ores will be subjected to value added processing before being able to be exported in 2014.

The company believes it will affect the mining business of the Group in Indonesia carried out by DGI, currently in the course of revising the overall business plan of the said mining business.

Any change in the business plan may affect the valuation of DGI which may or may not result in the Possible Impairment Loss, though revised business plan has yet to materialize.

Editing by Er Audy Zandri