Coal Fe to write down value of Abadi project
Wednesday, September 10 2014 - 01:41 AM WIB
ASX-listed Coal Fe said it was currently reviewing the fair value of its Abadi low grade coal project in East Kalimantan amid the lingering downturn in global coal price and delays in the payment of royalty by its Indonesian partner in the project.
?With the immediate forecast for the coal prices to remain suppressed, and with ongoing delays in payment of royalties by the Joint Venture partner, the board deems it prudent to take this step and write down the full value of the Abadi project,? Coal Fe said in a statement Tuesday.
Coal Fe entered into a joint venture and mine management agreement with Indonesian PT Toba Jaya in 2009 to develop the Abadi coal project, located in Kutai Kartanegara Regency, under which Coal Fe is supposed to receive royalty worth US$1 per ton of coal sold.
Under the Joint Venture Agreement, the Joint Venture partner is required to remit the royalty payment to Coal Fe within five business days of the coal being sold. ?At present the payment of this royalty is being delayed. Coal Fe has been making attempts to ensure the timely payment of the royalty,? the company said.
?While Coal Fe notes that the asset has been impaired, the tenure of the Abadi project continues until March 2024, where the board hopes that production can resume should coal prices increase in the future,? it said, adding that the Royalty Agreement continues to operate unaffected by the impairment.
Editing by Reiner Simanjuntak