Jatenergy signs conditional agreement for sale of Katingan

By Nellawati

ASX listed Jatenergy Limited recently stated it has received a Letter of Offer and has accepted the non binding offer for the sale of its 80 percent ownership of Katingan asset in South Kalimantan. The company stated that it is currently awaiting formal Conditional Share Sale and Purchase Agreement to be signed, in which final pricing is subject to further negotiation.

Katingan comprises of a single 5000 hectare tenement located 160 km northwest of the city of Palangkaraya on the south bank of the Katingan River. A scoping drilling program was completed in early 2009, which included eight holes and two partially-cored holes for 305 m of drilling.

"The sale is conditional upon Jatenergy purchasing the remaining 20 percent of the concession on behalf of the purchaser," the company said in a statement submitted to the ASX.

Jatenergy and the Purchaser will also negotiate and finalize a Conditional Share Sale and Purchase Agreement (CSPA) for its 100 percent owned Indonesian subsidiary Coal Soil Brik, in which Jatenergy holds its 80 percent ownership of the Katingan concession. Jatenergy will receive an initial payment of US$100,000 upon signing of the CSPA.

Following the signing of the CSPA, the Purchaser will conduct due diligence, in which Jatenergy will have a set time period to settle the conditions precedent, including items such as the full acquisition of the Katingan concession on behalf of the Purchaser, warranty that there are no third party agreements having been legally entered into and provide information, documents and compliance required to complete Purchaser?s due diligence

If the purchaser is satisfied, it will pay Jatenergy the final payment for the remaining purchase price by the closing date, conditional to Jatenergy's success in fulfilling the conditions precedence.

As previously announced, Jatenergy has been looking to divest certain unproductive long-term assets, including its Katingan coal asset, allowing it to increase its cash reserves while focusing on the main assets it already has in production, such as the Jongkang I and Jongkang II coal mines.

Jatenergy has recently sold its stockpile of coal from its Jongkang mines, currently negotiating a long-term off-take agreement with a local buyer for the life of the mines.

"If finalized, this agreement will provide certainty for the future of these mines, allowing them to operate profitably for the foreseeable future," the company said.

Editing by Er Audy Zandri