Fitch Affirms Golden Energy Mines at 'BB-'/'A+(idn)'; Outlook Stable

(Fitch Ratings - Hong Kong/Jakarta/Singapore - 12 Feb 2026)--Fitch Ratings has affirmed Indonesia-based PT Golden Energy Mines Tbk's (GEMS) Long-Term Issuer Default Rating at 'BB-'. At the same time, Fitch Ratings Indonesia has affirmed GEMS' National Long-Term Rating at 'A+(idn)'. The Outlook is Stable.

The affirmation reflects GEMS' business profile, which is commensurate with that of 'BB-' rated mining peers and underpinned by its operational scale and ability to manage costs during coal-price downturns. GEMS also maintains a consistent net cash position, which is conservative for its rating level.

'A' National Ratings denote expectations of a low level of default risk relative to other issuers or obligations in the same country or monetary union.

Key Rating Drivers

Mid-Sized Miner, Cost Flexibility: GEMS is among Indonesia's top-three thermal coal miners with production volume of around 55 million tonnes (mt) a year (9M25: 40mt) and a long proven reserve (1P) life of around 17 years. GEMS's business profile benefits from a robust cost position, with a life-of-mine strip ratio of 4.6x (9M25: 5.4x) and ability to curtail costs during periods of low coal prices.

GEMS kept EBITDA per tonne reasonable during the previous market downturn by curtailing costs. We expect the company's EBITDA to remain at around USD4-6 per tonne (9M25: USD7/tonne) between 2025 and 2028 on lower coal prices, in line with our commodity price deck.

Evolving Policy Risk: Indonesian thermal coal miners face rising policy risk from potential 2026 quota cuts, export duties and limits on export-retention funds, which Fitch has not fully reflected given the uncertainty. Fitch expects any quota cuts to disproportionately affect smaller or non-compliant miners. Material cuts to GEMS's quota that result in a sustained reduction in its operating scale could increase negative rating pressure, although this is not in Fitch's base case.

Low Capex Requirement: GEMS's strong operating cash flow should be able to fund its capex without the need for external funding. Future capex requirements will be minimal as most infrastructure is already in place to support its production target over the medium term. Furthermore, Fitch expects GEMS to have sufficient flexibility to delay capex during coal-price downturns.

High Asset Concentration: The PT Borneo Indobara (BIB) mine accounts for more than 90% of GEMS's total production and about 72% of its 1P reserves. The company's other mines have limited growth plans and are likely to remain small. Fitch believes reserve concentration risk is partly mitigated by BIB's large and diversified operations. Operational risk is also mitigated by the use of established mining contractors with solid track records.

Net Cash: GEMS's EBITDA declined by 48% yoy in 9M25 to USD285 million, driven by lower average selling prices as coal prices fell from previous highs. The company remained in a net cash position at end-September 2025. Fitch expects GEMS to maintain a strong balance sheet, supported by low capex requirements, with broadly neutral free cash flow as excess operating cash flow after capex is largely distributed as dividends. Management has indicated that GEMS has no plans to add leverage to its balance sheet to fund dividends.

Maintaining Domestic Funding Access: GEMS has maintained access to capital via the domestic banking market. Domestic banks have remained supportive of thermal coal projects as energy demand in Indonesia continues to grow. GEMS has no diversification plan and plans to remain a pure-play thermal coal producer over the medium term. We believe that business diversification is carried out via GEMS's immediate parent, PT Dian Swastatika Sentosa Tbk (DSS), or via its ultimate major shareholder, which is part of the broader Sinar Mas Group.

Rated on Standalone Basis: We rate GEMS on a standalone basis under our Parent and Subsidiary Linkage Rating Criteria, as we view GEMS's immediate parent, DSS, to have the same credit profile as GEMS. DSS is more diversified with interests in power and technology, but GEMS continues to account for most of its cash flow. DSS's net EBITDA leverage has been rising from low levels (last 12 months to September 2025: 1.1x) as part of its diversification. Should the metric deteriorate significantly, resulting in a weaker profile than GEMS's, Fitch may reassess GEMS's rating under the stronger subsidiary path, which may result in basing GEMS's rating on DSS's consolidated profile.

Limited Information on Ultimate Parent: We have no financial information on PT Sinar Mas, GEMS's ultimate majority shareholder, which is majority controlled by Frankly Oesman Widjaja and Indra Widjaja. However, we believe PT Sinar Mas' access to GEMS's cash is limited to shareholder returns, as GEMS and DSS are listed with public shareholders. Material related-party transactions with the parent are also subject to disclosure requirements and approval from independent shareholders.

Peer Analysis

GEMS is rated higher than PT Indika Energy Tbk (B+/A(idn)/Stable), reflecting GEMS's stronger financial profile, larger operating scale and lower execution risk. Both issuers have adequate reserve life in key thermal coal mines. Indika's financial profile is weaker due to higher net leverage as it executes its diversification strategy. Indika's commodity diversification should improve relative to GEMS's once its gold mining operations ramp up by 2027, although this benefit is likely to be moderated by Indika's higher leverage.

Higher rated peer Alliance Resource Partners, L.P. (BB/Stable) has larger scale and is more profitable than GEMS due to a better cost position (after adjusting for heat value). Alliance Resource Partners has also maintained a low leverage profile over the medium term, like GEMS.

Fitch’s Key Rating-Case Assumptions

-- Production volume averaging 55mt between 2026 and 2028 (9M25: 40mt);

-- Coal prices in line with Fitch's coal price deck on an energy-adjusted basis. We assume an average selling price per tonne of USD44 in 2026, USD43 in 2027 and USD42 in 2028;

-- Average strip ratio of 5.1x-5.2x in 2026-2028 (9M25: 5.4x);

-- Cash costs, excluding royalties, averaging USD31 between 2026 and 2028;

-- Annual capex of USD35 million-40 million during 2026-2028.

Corporate Rating Tool Inputs and Scores

Fitch scored the issuer as follows, using our Corporate Rating Tool (CRT) to produce the Standalone Credit Profile (SCP):

- Business and financial profile factors (assessment, relative importance): Management (bb+, moderate), sector characteristics (b+, moderate), market and competitive positioning (bb-, higher), diversification and asset quality (bb, moderate), company operational characteristics (bb, moderate), profitability (b-, moderate), financial structure (a+, lower), and financial flexibility (bbb+, moderate).

- The quantitative financial subfactors are based on custom CRT financial period parameters: 20% weight for the forecast year 2025, 40% for the forecast year 2026 and 40% for the forecast year 2027.

- The governance impact assessment of 'Good' results in no adjustment.

- The operating environment impact assessment of 'bbb-' results in no adjustment.

- The SCP is 'bb-'.

To derive the Long-Term IDR:

- Application of Fitch's Parent and Subsidiary Linkage Rating Criteria results in a standalone approach as GEM's credit profile is at the same level with that of its immediate parent, DSS.

RATING SENSITIVITIES

Factors that Could, Individually or Collectively, Lead to Negative Rating Action/Downgrade:

-- Sustained increase in the net debt/EBITDA ratio to above 2.0x (end-September 2025: net cash);

-- Evidence of weakened external funding access;

-- Weakened business profile from potential adverse material regulatory developments and/or a sustained decline in operating scale.

Factors that Could, Individually or Collectively, Lead to Positive Rating Action/Upgrade:

-- An upgrade may be considered if GEMS reduces its thermal coal concentration through earnings diversification while maintaining a prudent capital structure.

Liquidity and Debt Structure

The company's liquidity remained healthy as of end-September 2025, supported by a net cash position. Its short-term debt largely comprises working-capital-related loans. We forecast that GEMS will generate positive operating cash flow after capex over the medium term, reflecting its modest capex requirements.

Issuer Profile

GEMS is a pure-play thermal coal-mining company in Indonesia that operates three mining concessions. Indonesia-based DSS owns 51% of GEMS and PT ABM Investama Tbk owns 30% via a subsidiary.

REFERENCES FOR SUBSTANTIALLY MATERIAL SOURCE CITED AS KEY DRIVER OF RATING

The principal sources of information used in the analysis are described in the Applicable Criteria.

PT Sinar Mas is the ultimate parent of GEMS, with an indirect majority stake. Neither GEMS's management nor Fitch has access to PT Sinar Mas' financial statements as it is a private company. GEMS's immediate parent, DSS, is publicly listed with regular financial disclosures and we believe GEMS and DSS have similar credit profiles. PT Sinar Mas is a large conglomerate with various businesses, including pulp and paper, agri-business and food, financial services, real estate and energy, across Indonesia that are collectively of a much larger scale than GEMS's operations.

We rate GEMS on a standalone basis amid the limited information on PT Sinar Mas. We account for the limited information available on the ultimate parent by factoring in GEMS's high annual dividend payments, which align with management's strategy given GEMS's cash generative business and its limited growth plans. Material related-party transactions at GEMS as well as its immediate parent DSS require the approval of public shareholders.

We believe our assumptions about financial policy, governance and shareholder returns adequately incorporate the risk of the parent extracting cash from GEMS, despite the lack of financial information on PT Sinar Mas.

MACROECONOMIC ASSUMPTIONS AND SECTOR FORECASTS

Click here to access Fitch's latest quarterly Global Corporates Sector Forecasts Monitor data file which aggregates key data points used in our credit analysis. Fitch's macroeconomic forecasts, commodity price assumptions, default rate forecasts, sector key performance indicators and sector-level forecasts are among the data items included.

Climate Vulnerability Signals

GEM's Climate.VS for 2035 is 81 out of 100. The elevated signal reflects energy transition risks, including reduced demand for coal-fired power generation and the increasing availability of renewable energy as an alternative source of generation. The elevated Climate.VS has not affected the current rating due to the longer energy transition timeline in emerging markets such as Indonesia, as well as GEM's net cash position, supported by minimal capex requirements.

ESG Considerations

PT Golden Energy Mines Tbk has an ESG Relevance Score of '4' for GHG Emissions & Air Quality as it derives most of its revenue from thermal coal and it faces the risk of declining demand in the medium to long term because of coal's high carbon footprint. Funding access for thermal coal companies has also progressively tightened, which has a negative impact on the credit profile, and is relevant to the ratings in conjunction with other factors.

The highest level of ESG credit relevance is a score of '3', unless otherwise disclosed in this section. A score of '3' means ESG issues are credit-neutral or have only a minimal credit impact on the entity, either due to their nature or the way in which they are being managed by the entity. Fitch's ESG Relevance Scores are not inputs in the rating process; they are an observation on the relevance and materiality of ESG factors in the rating decision. For more information on Fitch's ESG Relevance Scores, visit https://www.fitchratings.com/topics/esg/products#esg-relevance-scores. (ends)