Handini signs MoU to build 300 MW mine-mouth power plant

ASX-listed thermal coal producer Handini Resources Limited announced on Monday that it had signed a Memorandum of Understanding (MoU) with PT. Global Multi Energi (GME) to evaluate the potential to build, own and operate (BOO) a 300MW mine mouth coal-fired power plant in Jambi province.

Under the terms, Handini is to undertake the pre-feasibility study for the plant's development within a period of three months (and extendable to six months) at a budgeted cost of A$200,000. GME is to identify the source of the coal supply and obtain the necessary permit, it said in a statement.

According to the company, if the pre-feasibility study is successful and a suitable coal supply is secured, Handini would then be identify sources of finance to produce a Bankable Feasibility Study, cover the costs of the licences to become an Independent Power Producer (IPP), and finance the turn-key construction of the power plant.

A joint venture would then be established between Handini and GME to mine the coal for the mine-mouth power plant, and all coal reserves identified would be equally owned between the two parties.

The plant would be located in Rantau Pandan district, Bungo Tebo regency, and would supply power to regions including western Sumatra, Riau (southern Sumatra) and the Jambi, Lampung and Bengkulu Districts.

Handini Resources acquired the operation through a transaction completed earlier this year with PT. Nusantara Thermal Coal (NTC), which holds a 30-year concession over the mine under a Coal Contract of Work with the Indonesian Government. The Muara Bungo Concession, which covers an area of 28.6 km2, has JORC Code compliant proved ore reserves of 22.9 million tons and probable ore reserves of 1.1 million tons, as well as measured resources of 31.7 million tons and indicated resources of 5.2 million tons. (denny)