Geo Energy units sign coal off-take, mining services agreements with AJE
Monday, October 31 2016 - 04:48 PM WIB
SGX-listed Geo Energy Resources Limited, an integrated Indonesian coal mining group, announced on Monday that its wholly-owned subsidiaries, Geo Coal International Pte Ltd (GCI) and PT Mitra Nasional Pratama (MNP) have entered into a Sale and Purchase of Coal Agreement (AJE Coal Off-take Agreement) and Coal Mining Management Service Agreement (AJE Management Service Agreement) respectively with PT Angsana Jaya Energi (AJE) for approximately 5 million tons of coal in 2017.
Geo Energy said in a statement that AJE is a holder of coal mining permit in Tanah Bumbu, South Kalimantan, Indonesia with a mining area of 773.1 hectares. The AJE coal mine is also located in close proximity to the Geo Energy?s SDJ coal mine which runs on the same coal seam.
AJE intends to conduct coal mining operation in a certain specified area of 259.5 hectares (the working block) has an estimated coal reserves of 5 million tons with calorific value of 4200 ? 4000 GAR.
Geo Energy said that due to its presence in the region, expertise in mine planning and lean operating model, MNP has been selected to provide mining project management services in the working block for AJE. Furthermore, AJE intends to appoint PT Bukit Makmur Mandiri Utama (BUMA) for the provision of overburden removal and coal hauling services.
Since June 2015, BUMA has been providing similar services at a cost competitive rate to neighbouring SDJ. Thus the AJE Management Service Agreement would create significant cost savings, large economies of scale, enhanced operational efficiency and harness synergies between both SDJ and AJE coal mines. ?This agreement also represents the Group?s first foray into mining project management services. All mining and production costs are borne by AJE, and MNP only provides project management services for AJE by working together with AJE?s contractors and BUMA,? Geo Energy said.
In July 2016, Geo Energy entered into a Life of Mine coal purchase agreement (LOM contract) with Engelhart Commodities Trading Partners (Singapore) Pte Ltd (ECTP Singapore) for the entire lifespan of SDJ coal mine. The LOM contract is to supply an initial 4 million tonnes of coal for a period of 7 months due in January 2017 and an additional minimum 6 million tons of coal for a period until December 2017 and a minimum 4 million tons of coal per year for the remainder period of the LOM contract with a prepayment of US$4 per ton.
As a result of Geo Energy?s proven track record in coal production and sales, GCI managed to secure an exclusive AJE Coal Off-take Agreement for approximately 5 million tons of coal for 2017 with an option to renew the agreement, if both parties agreed. ?This agreement would enable the Group to boost its coal sales and revenue beyond its existing coal assets,? Geo Energy said.
Chief Executive Officer of Geo Energy, Tung Kum Hon said, ?Both agreements represent a positive step in the right direction for our Group to move into higher value services in coal mining and to expand our revenue streams beyond our coal assets and improve the effectiveness and reduce the mining costs of the company?s SDJ coal mine.?
?Our Group is also in the midst of acquiring a 98.73 percent stake in PT Tanah Bumbu Resources, which is located beside our SDJ coal mine as well,? he said, adding that the proposed acquisition will add an additional 44.4 million tons of coal and effectively double our Geo Energy?s total mineable coal reserves.
?Our Group continues to seek out acquisition opportunities in the region to build up our coal reserves into one of Indonesia?s top coal producers going forward,? he ended.
Editing by Reiner Simanjuntak