ICRA Indonesia affirms [idr]A- rating of Golden Energy Mines

(Jakarta, May 28, 2015)--PT ICRA Indonesia (ICRA Indonesia) has affirmed the [Idr]A- (pronounced A minus) rating with a stable outlook of PT Golden Energy Mines Tbk (GEMS). The rating indicates adequate credit quality and the rated entity carries average credit risk. The rating is only an opinion on the general creditworthiness of the rated entity and not specific to any particular instrument.

The rating is driven by GEMS?s considerable amount of proven and probable coal reserves that would be sufficient to fuel its medium- to long-term growth, healthy capital structure and debt protection metrics that lend significant financial flexibility, and the benefits of support from its parent?s group of companies and affiliates. These strengths are somewhat constrained by subdued coal mining industry outlook, the susceptibility of GEMS?s operating performance to the volatility in the coal prices and its small operational scale that results in relatively low profitability.

GEMS?s ratings could move up if the company is able to scale up its operations that translate into the corresponding and sustainable improvement in its operating performance and profitability on account of the expected economies of scale. Conversely, the rating could be under pressure if there is a significant deterioration in the operating performance or stability, or if GEMS assumes substantially higher than expected debt, thereby weakening the debt protection metrics. (ends)