Equatorial quits two coal projects to cut expenditures

ASX-listed firm Equatorial Coal Limited (EQX) is focusing to bring its Alam Duta coal mine project in Kintab, South Kalimantan into production and has decided to cease involvement in two other coal projects to cut expenditure.

The company said it had notified its Indonesian partner PT. Mega Coal Indomine decision not to progress with Mega Coal in the joint development of a project in the nearby Petangis North area of East Kalimantan. EQX also cut its involvement in another joint coal development project with Mega Coal.

The termination of the projects, said the company, would incur obligation for Mega Coal to refund US$4.5 million monies that had been deposited by EQX. EQX and Mega Coal are now discussing refund mechanism, the company said.

?The funds will then be applied by EQX to working capital to complete the remaining due diligence on permits held under MOU 2 with Mega Coal. The proximity of MOU 2 to Alam Duta means that the most sensible way forward for EQX in 2009 is to bring Alam Duta into full production and leverage the infrastructure from this operation to develop the appropriate permits held under MOU 2 which are located nearby,? the company said.

Alam Duta is set to produce at 1 million tonnes of coal per annum. EQX has 51 percent stake in Alam Duta with Mega Coal having the balance. (denny)