Geo Energy?s units sign mining service contract, cooperation agreement
Tuesday, September 24 2013 - 12:13 PM WIB
SGX-listed firm Geo Energy Resources Limited announced on Tuesday that its subsidiary, PT Mitra Nasional Pratama (MNP), had on Sept. 24, 2013 entered into a Mining Services Contract with PT Parisma Jaya Abadi (PJA).
On the same day, another subsidiary Geo Coal International Pte. Ltd. (GCI) entered into a coal Mining Cooperation Agreement with PJA.
PJA holds mining business permits for a concession area of 5,000 hectares located in the Kedung Murung and Lebak Mantan Villages, Kota Bangun and Muara Wis District, Kutai Kartanegara Regency, East Kalimantan Province .
Pursuant to the mining services contract, MNP shall be exclusively appointed to provide mining services, comprising mainly overburden removal, in a specified area or work block of approximately 150 hectares within the concession area. MNP shall receive a service fee of US$2.50 (excluding value added tax) per bank cubic meter for overburden removal. Additional fees shall be chargeable by MNP for services beyond the specified scope of work.
The appointment of MNP under the Mining Services Contract shall be effective from the date thereof.
Pursuant to the Mining Cooperation Agreement, PJA and GCI have agreed to cooperate with each other to produce coal in the work block. PJA has agreed to sell and deliver the coal produced from the work block, exclusively to GCI. PJA has undertaken exploratory activities and guaranteed that the potential coal contained in the work block is approximately 420,000 metric tons of coal with calorific value in excess of 6,800kcal/kg (GAR). The exploration results were made available to MNP, which has commenced drilling and boring works at the concession to ascertain the coal deposit.
In the event that the volume of coal produced from the work block amounts to less than 420,000 metric tons, PJA will assign to GCI additional work blocks until the volume of coal produced reaches 420,000 metric tons.
GCI shall make an upfront payment of $2.94 million to PJA within 14 days from the date of the Mining Cooperation Agreement.
Taking into account the aforementioned upfront payment, the purchase prices of coal under the Mining Cooperation Agreement shall be (i) $61.55 per metric ton of coal with calorific value in excess of 6,800kcal/kg (GAR); and (ii) $71.55 per metric ton of coking coal, both of which will be transacted on a FOB barge basis. In addition, GCI has the right to evaluate the price of coal, in light of any price fluctuations, and its evaluations shall form the basis for discussion on any price adjustments.
If the sale and purchase of coal under the Mining Cooperation Agreement cannot be performed for any reason, GCI shall have the right to terminate the Mining Cooperation Agreement and any money paid by GCI to PJA shall be returned fully without any deduction whatsoever within 14 days of such termination.
The Mining Cooperation Agreement shall be effective from the date thereof until the production and sale of coal to GCI reaches 420,000 metric tons or mining activities in the work block (or any other additional work blocks assigned) are no longer economically or technically feasible. In the event that the production of coal does not reach 420,000 metric tons within the next ten months, GCI may terminate the Mining Cooperation Agreement.
Editing by Johannes Simbolon