OGL Indotrade secures $52m of coal sales contract

Australia-listed firm Overseas & General Limited (OGL), through its Indonesian subsidiary PT. OGL Indotrade has secured a full corporate offer (FCO) agreement, as a final step prior to executing a sales contract, with a Chinese power utility for the supply of 50,000 tons per month of coal from its Jongkang mine in Kutai Kartanegara regency, East Kalimantan starting September 2010.

The contract will have a 12-month term with price at an FOB vessel price of U$80 per ton for 6,300 kcal/kg of gross calorific value (GCV), the company said in a statement on Thursday.

Jongkang coal mine is being operated at 25,000 tons per month producing a premium coal product with energy of 6,950 cal/g adb GCV, 2% ash and 0.7% sulphur. Jongkang product will be complemented by the purchase of additional, lower energy coal from a neighbouring supplier to allow the company to sell 50,000 tons per month.

?The coal sales will provide OGL Indotrade with a revenue stream of $4.0 million per month, or $52 million per annum, assuming the successful delivery of Jongkang coal throughout the contract,? the company said.

The coals will be blended at the Jongkang stockpile facility on the Mahakam River to meet the Chinese specification requirements of GCV 6,300 cal/g energy, maximum 12% ash and 1 % sulphur content, it said.

OGL?s experienced technical team has completed mine planning and scheduling and is directly supervising all mining operations. A site office has been established and a full complement of mine workers employed. Earthmoving equipment, which has been rented by OGL Indotrade, was mobilized to the Jongkang mine site in mid-August and has recommenced overburden removal.

The Jongkang operations will supplement coal output from OGL?s Rahmat project, which is simultaneously being developed to produce at 50,000 tons per month. First production of Rahmat coal is expected for September 2010. (kanti)