Coal Fe updates Indonesia coal projects
Tuesday, January 31 2012 - 10:43 AM WIB
INTRODUCTION
The fourth quarter of 2011 saw the continuous efforts in producing from the Abadi Project with a 33% increase in its coal production compared to the last quarter. Sale of coal was mainly in the local market as part of the group?s efforts in meeting the Domestic Market obligations imposed by the Indonesian Government.
Additional machinery is being commissioned to step up the production and delivery of coal to meet the production target of 50,000MT per month.
PROJECT REVIEW
ABADI PROJECT
The PT. Pancaran Surya Abadi (?Abadi?) Project is located in the district of Muara Badak and Anggana, Regency of Kutai Kartanegara, in the Province of East Kalimantan (See Figure 1). The area of the concession was adjusted marginally from 1,017 Ha to 991 Ha in the final Mining, Operation and Production Licence (Izin Usaha Penambangan Operasi Produksi or ?IUP? in compliance of the new Law on Mineral and Coal Mining No. 4/2009 in the Republic of Indonesia), owing to the requirement of providing the necessary buffer zone for the existing gas pipeline in the vicinity. Of this total concession area, the completed drilling program covered 300 Ha. The remaining 691 Ha is presently unexplored.
The concession area can be reached from Balikpapan by land transportation to Samarinda and thence continuing to Selo Lai village. The exploration area is relatively easily reached by 4WD vehicles.
The Mining, Operation and Production Licence (IUP Operasi Produksi) provides the necessary authority to carry out the full scope of coal mining activities encompassing construction, production, processing, transportation and sale. The Mining, Operation and Production Licence expires on 10 September 2025.
This estimate was carried out following completion of the second phase drilling at the project between March and May 2009 with a total of 50 additional drill-holes penetrating to a typical depth of 50-lOOm from surface. The additional drilling was located within the main project area of about 300 Ha located in the south-western portion of the overall concession area. All holes were electronically logged for density, resistivity and width.
The Company entered into a Joint Venture and Mine Management Agreement with PT Toba Jaya (Toba Jaya), an established mining contractor in the Republic of Indonesia in April 2009. Toba Jaya developed the mine infrastructure and commenced coal production in late 2010.
Activities during the October ? December Quarter
Coal Sale
The quarter under review recorded a total coal sale of 83,529.62 which represents 33% increase in coal production compared to the last quarter. The sale was mainly to domestic coal buyers as part of our efforts to meet the requirements of the Domestic Market Obligation (DM0) in Indonesia.
The coal sales were delivered onto barges anchored at the private jetty of PT. Pancaran Surya Abadi (Abadi). The transacted prices were within the range of USD32 - 35 per metric ton.
As provided in the Joint Mine Management Agreement between the Company and PT. Toba Jaya, these coal sales translate into a royalty of between USD1.00 ?USD2.50 per metric ton for the Company. With the expected improvement in coal prices in the market, the Company will enjoy a royalty of USD2.50 per metric ton and USD3.00 per metric ton when the coal price (on FOB Barge basis) reaches and exceeds USD35 per metric ton and USD45 per metric ton respectively.
Machineries
Two new loaders were commissioned during the quarter under review as part of Toba Jaya?s efforts to improve the delivering and loading of coal at the stockyard and jetty,
Three additional new excavators were also delivered to the mine pit to meet the planned production target of 50,000MT per month.
Moving Forward
.it is planned that a stable production of 50,000MT per month is maintained before the next production target of 80,000 MT per month.
The Company plans to carry out the next phase of exploration to explore the coal resources in the remaining 691 ha of the Abadi Concession in year 2012. The Company is finalising its plan to raise the necessary capital for such purpose and the appropriate announcement will be made in the near future.
PALAPA PROJECT
The Palapa Coal project is a 100 Ha project located upon the western margin of the island of Sulawesi. The regional geology is similar to that observed in Kalimantan with moderate coal production coming from the south western corner of the island.
The project is located within the administrative boundary of the Banti Village, Kecamatan Baraka, Kabupaten Enrekang, South Sulawesi Province and can be reached by two wheel or four wheel drive. Ujungpandang city is approximately 300 kilometres from the project area.
Coal FE has not been able to proceed with work on the 100 Ha Palapa Project during the period. This is due to outstanding obligations under the license that are to be fulfilled by the owners of CV Palapa. Coal FE has negotiated with the owners to allow Coal FE to explore another concession that has been granted to the owners whilst the owners settle its outstanding obligations stated under the license for the Palapa project. The new concession area is known as the Palapa 2 project.
The Palapa 2 project is a 2,946 Ha concession area located next to the Palapa project and has been offered to Coal FE at initially no cost to the company to carry out exploration activity. An exploration license has been issued for the concession area which expired on 1 November 2008 and can be renewed once payment is made for the extension.
Activities during the October ? December Quarter
No activity has been carried out in the Palapa 2 Project during the quarter under review. Upon availability of funds, the Company will review the extension of the exploration licence and exploration of the project.
ANDALAS PROJECTS
The Company (through its subsidiary, PT Techventure Indocoal) has a 70% interest in four (4) Indonesian companies, which currently holds exploration licenses for iron concessions in Central and West Sumatra, Indonesia.
The concession areas can be reached by daily flight from Jakarta to Padang (1 hour and 30 minutes). From Padang the journey continues by car (4 hours drive) through the well-paved Trans-Sumatera highway to a village called Air Manggis (about 10 minutes by car from Lubuk Sikaping, capital city of Pasaman regency). From Air Manggis Village there is another one hour walk to Sariak Laweh Hill with a moderate to steep slope.
Activities during the October ? December Quarter
No activity has been carried out in the Andalas Project during the quarter under review. Upon availability of funds, the Company will review the exploration of the project.(end of excerpt)