Orpheus secures barge loading slots at South Kalimantan port

By Ruli Setiawan

ASX-listed Orpheus Energy Limited said it has executed a binding agreement with the proprietor of SKJM Port in South Kalimantan to secure exclusive barge loading capacity in excess of 200,000 tons per month for a term of 10 years.

Orpheus has executed a commercial-in-confidence, binding agreement with a local Indonesian infrastructure investor to fund the transaction, the company said in a statement obtained Tuesday.

The statement explained that PT Orpheus Energy (PTO), Orpheus?s 100 percent owned Indonesian subsidiary, has already received the first tranche (of two tranches) payment and the funds are to be deployed progressively over the course of the next several months as the SKJM facilities are upgraded. SKJM Port is legally obliged to repay the principal amount to PTO in equal monthly installments, which will be passed through to the funder, together with a commercial rate of interest on the reducing balance.

Orpheus has been shipping its coal from the SKJM port during 2013, and as previously announced, the company has been in advanced discussions regarding equity participation in, and management of, existing port infrastructure. The agreement means the SKJM Port will continue to be managed by the current port owner, however, Orpheus will be responsible for the allocation of loading slots with barge loading to commence immediately.

As previously reported, Orpheus has been impacted by the limited availability of barge loading slots in 2013 due to fierce competition between producers and traders. The SKJM development enables Orpheus to secure up to 25 million tons loading capacity for its coal over the next decade, avoiding any slot competition issues. In addition to securing port loading capacity for its own coal as the company ramps up production from its existing mining projects, the deal also establishes another revenue stream through loading other producers? coal.

Orpheus Executive Chairman, Wayne Mitchell, commented: ?We are delighted to announce this highly material infrastructure development which will provide robust cash flows for Orpheus. We have been working on this deal for a significant period of time and the execution of the SKJM Port agreement fundamentally changes our company from a modest producer and seller of coal, to a vertically integrated mining company of significant size.?

Editing by Reiner Simanjuntak