Geo Energy receives additional prepayment of $40m from ECTP
Wednesday, December 27 2017 - 12:53 AM WIB
SGX-listed coal firm Geo Energy Resources Limited, which operates coal mines in Indonesia, said that it has received an additional prepayment of US$40 million from coal trader Engelhart Commodities Trading Partner (ECTP) for 2018 and that Geo Energy will supply a minimum quantity of 7.5 million tons of coal in 2018 to ECTP.
Geo Energy said in a statement on Tuesday that thermal coal of 4,200 GAR is to be delivered from its coal mine in South Kalimantan Province run by subsidiary PT Sungai Danau Jaya (SDJ).
The group had on July 5, 2016 entered into a Life of Mine (LOM) Agreement with ECTP to supply 4,200 GAR thermal coal over the life of the SDJ coal mine subject to the terms of the agreement. Following the LOM Agreement, the group had secured two coal offtake agreements with ECTP to supply 4 million tons of coal by January 2017 and an additional 7 million tons of coal by December 2017.
?The Group had, to-date fulfilled the terms of its coal offtake agreement for 2017, ?Geo Energy said. Since the company commenced coal production in December 2015, it has delivered 5.5 million tons of coal to ECTP in 2016 and 5.6 million tons of coal for the nine months ending September 2017.
Commenting on the additional prepayment for 2018, Tung Kum Hon, Chief Executive Officer of Geo Energy said, ?The additional prepayment from ECTP for 2018 is a testament of the demand for SDJ coal and our ability to deliver.?
?SDJ?s low Sulphur and ash content coal has continued to generate great demand from major Chinese power plants,? he added.
He said ECTP plays a major role in distributing its brand of coal in China and will also efficiently map out demand in other regions such as South-east Asia.
?On 1 December 2017, we achieved a new milestone and shipped the first capesize vessel of 153,000 tons of coal to Adani for the Indian market,? Tung said.
The sales of 7.5 million tons of coal to ECTP in 2018 is expected to yield Geo Energy more than US$345.0 million in revenue next year based on the current Indonesian Coal Index (ICI) price for 4,200 GAR coal of approximately US$46.00 per ton.
?We are also in the midst of discussions and finalizing the offtake prepayment and mining services contracts for our newly acquired Tanah Bumbu Resources (TBR) mine, which we will be announced shortly. This would put us in good stead as the Group grows towards becoming one of the biggest coal producers in Indonesia,? Tung said.
Editing by Reiner Simanjuntak