Kangaroo updates Indonesian coal projects
Tuesday, January 31 2012 - 02:24 AM WIB
During the December 2011 Quarter, Kangaroo Resources Limited continued to lay the foundations for its development as a leading coal producer following the transformational transaction with the leading Indonesian coal conglomerate PT Bayan Resources Tbk (?Bayan?) completed earlier in the year.
Key developments during the Quarter included the signing of a key mining contract at the Mamahak Coking Coal Project and the acquisition of direct foreign ownership of key assets within the Pakar Project, the flagship asset acquired by KRL as part of the transaction with Bayan.
Mamahak Coking Coal Project
During the Quarter, KRL?s subsidiary, PT Mamahak Coal Mining, signed a key five-year mining contract, with an approximate value of US$270 million, with PT Putra Perkasa Abadi (www.pracoal.com) to mine up to 4.5 million metric tonnes of coking coal from its 99% owned Mamahak Project in Indonesia.
The contract - which commenced on 1 January 2012 and includes the removal of up to 90 million BCM of overburden - is designed to underpin the ramp-up of production from the Mamahak Project to full commercial levels.
Kangaroo?s major shareholder and strategic partner, Bayan Resources, assisted in the negotiation of the Mamahak mining contract utilising its extensive expertise and knowledge of coal mining in Indonesia.
Together with other operational initiatives being implemented under Bayan?s management, the new mining contract will cement the transition of Mamahak from the small-scale mining operations carried out to date to full-scale production.
The mining contract sets coal production targets over the 5-year period, with a target of up to 1 million metric tonnes per annum.
The contractor commenced mobilisation of key equipment, including overburden removal and coal mining equipment in December, with mobilisation expected to continue throughout the year and the majority of equipment due on site by Q3 2012.
The contract incorporates a scope of works for the mining contractor including project management, mine planning, surveying, supervision, site security, materials, equipment, equipment maintenance, labour, transportation, medical services, consumables and site infrastructure to carry out the works.
As part of the award of this contract, an upgrade of the existing haul road is planned with work scheduled to commence in Q2 2012 and to be completed by end of .2012.
The Company has also identified a new haul road alignment to a permanent barge loading facility on the Mahakam River that will significantly improve year-round barging access at Mamahak.
A LIDAR topographic survey is expected to be undertaken to complete the survey works required to commence the fender process for constructing the new road.
A tender is also in process for the construction of the new camp and support facilities, / with award and commencement of construction expected to occur during 2012 and the first phase targeted for completion by the end of 2012.
Stage one of an exploration drilling program has been planned and the Company is currently in the process of selecting a drilling contractor to mobilize to site.
This exploration program, which will continue throughout 2012, has been designed to increase the current Mamahak coal resource and provide the basis for the definition of a Coal Reserve.
Small-scale coal mining operations continued at the Mamahak Project during the Quarter. Total receipts from coal sales of -$588,000 were recorded for the December Quarter.
Coal revenues were restricted during the Quarter due to the transition to the new mining contractor commencing in January 2012 and the phased return of the rented equipment previously utilized.
Mamahak coal is sold at a market price FOB Mamahak jetty, with Bayan pre-funding most of the coal on arrival at Mamahak port stockpile and the balance upon completion of loading onto barges for shipment.
Pakar Thermal Coal Project
During the Quarter, the Company executed deeds of transfer with Bayan giving it direct foreign ownership of five key concessions and one asset-holding company (controlling various assets constituting land, building and other mining support facilities, namely PT Sumber Aset Utama) at the Pakar Thermal Coal Project in Kalimanfan, Indonesia.
This further enhances KRL?s ownership of the project, clearing the way for commercial development of this cornerstone asset to proceed.
The ownership has been effected by converting each of the five concession holding companies (with IUP licences) and one asset-holding company to Indonesian PMA companies (a foreign investment company) and transferring 99 per cent of the shares from Bayan to KRL.
The Pakar Coal Project is a cornerstone asset in KRL?s Indonesian coat production strategy and the direct ownership will secure KRL?s exposure to future cash flows to be generated by the Project, and complements KRL?s existing portfolio of thermal and coking coal projects in Indonesia.
Bayan is continuing pre-development activities at Pakar in conjunction with its adjacent Tabang Project, with the aim of developing centralized material handling infrastructure and barge loading facilities for both projects.
GPK Thermal Coal Project
At the GPK Project, KRL is continuing the process of acquiring direct foreign ownership of the asset by converting PT GPK into an Indonesian PMA company (a foreign investment company) and transferring approximately 85 per cent of the shares in PT GPK directly to KRL.
Together with Bayan, KRL is continuing preparations of a tender pack for the appointment of mining contractors at GPK. This work has been delayed due to commitments at Mamahak and Pakar and a back-log of work being experienced by KRL?s mining consultants. However, the tender pack is expected to be completed during Q1 2012.
The Company will then invite reputable contractors to prepare mining contract documentation to consider for the appointment and initial mobilisation of subcontractors during 2012. with additional necessary construction works to commence thereafter.
KRL expects that the works conducted and contractors identified during the Mamahak process will position the Company to fast-track this current GPK tender process.
CORPORATE
The Company held its Annual General Meeting in Perth on 25th November 2011.
Cash at bank at the end of the December Quarter was - $4.7 million, with a total of US$15 million due to be received once the complete project equity component of the Pakar transaction has been finalised. .
Change of Financial Year End Date to 31 December
The Company has advised ASIC that we will be changing the financial year end date
from 30 June to 31 December.
The change of year end allows the Company to align its financial year end date with that of its majority shareholder PT Bayan Resources Tbk and its Indonesian subsidiaries.
The next financial year for the Company will be a transitional one from 1 July 2011 to 31 December 2011 (i.e. six months). Thereafter, the Company will report to ASIC and the ASX as normal with respect to a 31 December financial year end.
KEY OBJECTIVES FOR MARCH 2012 QUARTER
- Completing the regulatory process and obtaining Government sign-off for the outstanding Pakar Project equity to be transferred to KRL.
- Continuing mobilisation and operations under the terms of the Mamahak mining contract and associated construction sub-contracts.
- Continue the evaluation of GPK contract mining tender and commence negotiations with mining contractors. (end of release)