Golden Energy returns to profitability

By Romel S. Gurky

SGX-listed Golden Energy and Resources Limited (GEAR), an international coal mining and trading company, recorded are turn in profitability with net profit of US$11.6 million for the three-month period ended September 30, 2016 (3Q 2016), compared to a net loss of $5.5 million in the last corresponding period (3Q 2015).

GEAR said in a statement Friday that its 3Q 2016 net profit is based on the average selling price of approximately $32/ton from the Group?s PT Borneo Indobara (BIB) and PT Kuansing Inti Makmur (KIM) coal concessions. The Indonesia Coal Index 4 (ICI 4), on which GEAR?s BIB concession produces coal of similar quality, has risen 19 percent since early August 2016 to about $37/t in September2016.

The surge in GEAR?s profitability was bolstered by a corresponding rise in the Group?s revenue to $97.6 million in 3Q 2016, an18.1 percent increase from $82.7 million in 3Q 2015, mainly due to higher sales volume in the Coal Mining Division, which recorded a 23.1 percent increase to $87.1 million.

Fuganto Widjaja, Executive Director and Group CEO of GEAR, said, ?We have successfully weathered the downturn in the coal industry from 2011 to present, increasing our production steadily and remaining operationally profitable through the troughs of the coal cycle. The surge in profit in 3Q2016, was not only on the back of the recent commencement of the coal price rally, but also attributable to our dedicated management team who had constantly driven improvements in operational productivity as well as instilled a strong sense of cost discipline within our Group.?

GEAR said gross profit rose 52.0 percent to $39.4 million in 3Q 2016 from $25.9 million in the previous corresponding period.

GEAR?s total assets and total liabilities remained relatively stable across reporting periods.

As at August 31, 2016, the Group has aggregate coal resources estimates 1 of 2,154 million tons (MT) across its concessions. GEAR?s coal business, which is held by the IDX-listed PT Golden Energy Mines Tbk (GEMS) Group, is valued at $3.1 billion in an independent business valuation report by Jones Lang LaSalle Corporate Appraisal and Advisory Limited. GEAR holds a 66.9998 percent equity interest in GEMS.

GEAR said it maintains a positive outlook for its coal business as it moves into the final quarter of the year in view of the current uptrend in coal prices that is expected to continue into 1Q 2017, driven by a resurgence in coal demand particularly among China, Japan, South Korea and other Asia-Pacific buyers.

Commenting on the outlook, Widjaja said, ?We have taken active steps to enhance our operational efficiencies and infrastructure to support an increase in coal production and sales, so that we remain well-positioned to leverage on the wealth of opportunities brought about by the growing international demand for coal and the recent coal price rally.?

The Group is principally engaged in the exploration, mining,and marketing of thermal coal sourced from its coal mining concession areas,covering an aggregate of approximately 38,165 hectares in South Kalimantan, Central Kalimantan and Jambi (a province in Sumatra).

Editing by Reiner Simanjuntak