Jatenergy signs deal with Chapmans to boost production at RI coal projects
Tuesday, November 19 2013 - 01:02 AM WIB
ASX-listed Jatenergy Limited said that a binding term sheet with investment company Chapmans Limited (CHP) was signed on Tuesday for the latter to invest at its coal projects in Indonesia.
Under the agreement, Chapmans will invest US$200,000 directly into the Jongkang project in return for a 50 percent profit share with Jatenergy, the company said in a statement. This investment will be used to substantially increase coal production.
Under the agreement, Chapmans also has the option to invest a further $850,000 into the Geronggang project direct for profit share or Blackrock through a private share subscription. The entirety of this funding will be used to increase production of the projects and to further establish the PT Barata Energy coal operation in Indonesia.
?If they elect to make this further investment as a share subscription agreement, it will result in Chapmans having a 50 percent ownership of Indonesian coal production projects Jongkang, Geronggang and Sebuku,? the company said.
Jatenergy and Chapmans have developed detailed business and marketing plans, and over the coming months, which will release production timelines and detailed targets.
After investing the initial $200,000 directly into Jongkang for a 50 percent profit share in the project, Chapmans has either option to invest direct into Geronggang or subscribe to acquire 50% of Blackrock, in which the PT Barata Energy projects are housed.
This joint venture will initially rework the Jongkang project into a production mine facility. If Chapman?s elects to invest the further $850,000 Jatenergy will establish a mine site at Geronggang which will take around 2‐3 months to establish. Jatenergy will also review Sebuku for potential mine opening and exploitation.
Executive Chairman of Jatenergy Tony Crimmins stated, ?With substantial capital being committed by Chapmans Limited, Jatenergy will be able to utilize this investment to significantly increase production at Jongkang and also move the Geronggang project into production. The company also plans to use some of the cash flow generated from these projects to plan the mining on Sebuku Island.?
The Jongkang I and Jongkang II projects are currently in production and produced around 35,000 tons over the past year and were developed in December 2011 as part of a Joint Venture arrangement with a local Indonesian partner. Located in East Kalimantan approximately 5 km along an existing haul road from the Mahakam River, and about 25 km from a major hub of Indonesia?s coal industry at Samarinda, each concession is covered by a production license comprising 100 hectares.
Editing by Reiner Simanjuntak