Geo Energy subsidiary signs new contracts

By Peni Pedriawan

SGX-listed Geo Energy Resources Limited recently stated that its subsidiary, PT Mitra Nasional Pratama (MNP) had on December 11, 2012 entered into a mining services contract and a coal sale and purchase contract with PT Arini, which holds a mine concession for an area of 3,890 hectares located in Handil Terusan Village, Anggana Subdistrict, Kutai Kartanegara Regency East Kalimantan.

Pursuant to the mining services contract, MNP shall be exclusively appointed to provide mining services, comprising of overburden removal and coal haulage, in a specified area within the concession area, namely the Work Block effective immediately. MNP shall receive a service fee of US$2.50 (excluding value added tax) per bank cubic metre for overburden removal, and a service fee of US$0.20 per ton per kilometer of coal haulage. "Additional fees shall be chargeable by MNP for services beyond the specified scope of work," the company said in a statement submitted to the stock exchange.

Pursuant to the coal purchase contract, Arini has agreed to sell and deliver the coal produced from the Work Block exclusively to MNP. Arini has guaranteed that the coal existing in and to be produced from the Work Block shall be no less than 4 million metric tons. The volume of coal to be produced and delivered to MNP shall be at least 1 million metric tons per year or such other volume as may be required by MNP.

"The price of coal under the contract shall be determined from time to time by the parties before delivery of the coal to MNP, taking into account the Indonesia Coal Index. MNP shall pay a down payment of US$5 million to Arini by installments and the down payment shall be utilized to partially settle MNP?s payment obligation for each delivery and shipment of coal until it has been fully utilized," the company said.

Editing by Adianto P. Simamora