Geo Energy to expand coal business

By Ruli Setiawan

SGX-listed Geo Energy Resources Limited, an Indonesian coal mining specialist, said that it would continue to look out for business expansion opportunities which may include acquisitions, joint ventures and/or strategic alliances to expand its business operations and increase its coal production levels.

The Group would also continue to enter into suitable coal mining arrangements with other third party sources to gain access to new concession areas in order to expand its operations.

Commenting on the Group?s long-term growth strategy, Melati added, ?Our recent contracts have given us good momentum as we moved into 2013. Barring any unforeseen circumstances, we expect our sales volume to increase, in line with our planned increase in production capacity. This year will officially mark our first full year as a listed company since our listing in October 2012 and we will continue to seek out opportunities to maintain our momentum and expand our operations in order to sustain the growth of the company.?

The company had on 25 February entered into conditional sale and purchase agreements to purchase four mining concessions in Kutai Barat Regency, East Kalimantan.

In its annual report, the company reported to post a 33% year-on-year increase in its net profit after tax to US$19.2 million on the back of higher revenue and better profit margins.

Group revenue increased 14% y-o-y to US$78.8 million as it commenced operations as a mine owner cum operator in respect of the BEK Mining Concession in January 2012.

Coal sales increased by 0.7 million tons to 1.6 million tons in FY2012, from 0.9 million tons in FY2011.

However, the increase in revenue was partially offset by the decrease in average selling price of coal from US$73.4 per ton in FY2011 to US$46.5 per ton in FY2012 as the average calorific value of coal produced from the Group?s BEK Mine was lower as compared to coal sales under the Group?s coal cooperation contracts.

The Group?s FY2012 gross profit margin increased 7.5 percentage points from 38.5% in FY2011 to 46.0% in FY2012 due to an increase in overall coal production volume by approximately 88% from 0.8 million tons in FY2011 to 1.5 million tons and a lower average stripping ratio from the BEK Mine as compared to that of the coal cooperation contracts. Consequently, gross profit surged by 36% y-o-y to US$36.2 million.

Charles Antonny Melati, Executive Chairman of Geo Energy, said, ?With the expansion of our operations, our FY2012 production volume increased and - coupled with a lower average stripping ratio from our BEK mine - it contributed to significantly better profit margins and profitability for our Group."

Editing by Adianto P. Simamora