Killara signs coal sale agreement for 100% of output from BEH project
Wednesday, October 30 2013 - 02:47 AM WIB
ASX-listed Killara Resources has entered into a coal sale agreement with off-taker Coal Operations & Assets Pte Ltd (COPA) for 100 percent of the coal output from its PT Borneo Emas Hitam (BEH) thermal coal project in East Kalimantan.
The company said in a statement received Wednesday that this agreement will provide ongoing revenue from coal sales and means that Killara will move to becoming cash flow positive over the coming months.
?This transaction represents an exciting transition for the company, moving from explorer to producer,? said the company, which acquired 80 percent shares in BEH in May of this year, transforming it from a junior mining explorer to an Indonesian coal producer.
Key commercial terms of the agreement are:
? Killara to receive an Advance Coal Sale Deposit of US$500,000, payable within 18 days of signing the agreement. This payment is subject to COPA?s own due diligence in respect of mining reserves and work scheduling for the delivery of coal. Failure of COPA to make this advance payment would allow Killara to enter Off-Take arrangements with other third parties.
? The agreement is for 100% of coal output from Killara?s BEH project.
? Price of Coal Sales to be locked in for a period of twelve months and then linked to market prices.
? Anticipated gross margin from the Coal Sale Agreement is expected to be in the vicinity of US$14.50 per ton to Killara.
COPA has been established by experienced German coal operator and trader, Carlo Liszetzki. Carlo has extensive hands on experience in coal operations and has been trading for over twenty eight years, including previous work experience in Europe, predominantly in Germany. He has been involved in Indonesia since 2004, together with Jay Alatas (the chairman of PT Hikmah Aibros and commissioner of Bumi Resources from 2001 to 2012).
Along with Alatas and others, Carlo has established COPA with the aim of becoming a reliable supplier of coal from Indonesia. COPA has entered into agreements to supply a minimum of 1.4 million MT to a group of Chinese power plants within the next year. It is anticipated that the coal from the BEH project will be blended and used within the Chinese power plant industry.
Editing by Reiner Simanjuntak