Orpheus sells stake in E. Kalimantan coal projects
Thursday, January 31 2013 - 02:47 AM WIB
Australia-listed Orpheus Energy Limited said that it has sold its 51 percent equity stake in East Kalimantan coal projects, Block 2 and Block 6 (B26), back to the company?s joint venture partner, PT Mega Coal, for US$2 million.
The sale price represents a 17 percent profit margin to Orpheus when taking into account the acquisition and development costs of the projects paid by the company to date, it said in a statement obtained Thursday.
The sale proceeds will significantly strengthen Orpheus?s balance sheet as it moves towards achieving positive cash flow from existing production operations at the Kintap ADK mine. This allows the company?s operational team to more efficiently develop its long-term target area of South Kalimantan in Indonesia, Orpheus explained.
The South Kalimantan development program includes increasing production at the Kintap ADK mine, bringing proximal projects into production in the near term, and developing independent infrastructure to support the company?s mining operations. Additionally, Orpheus?s geological team will now be focused on identifying a large exploration target in the South Kalimantan area for resource definition and mining development.
Under the terms of the binding Heads of Agreement, the US$2m payment will be made to Orpheus by 8 March 2013 .
Executive Chairman Wayne Mitchell commented: ?Orpheus is delighted to have completed the B26 sale as it enables our technical team to focus on our South Kalimantan assets which have the potential for increasing our production profile. Our mining activities at South Kalimantan are much simpler given low strip ratios, thicker seams and good access to critical infrastructure.
?Additionally, to have sold B26 at a significant profit bolsters our existing cash reserves and provides us with the working capital to more quickly execute on our stated objective of bringing a large coal resource project into the portfolio.
?Orpheus continues to work with its partner PT Mega Coal to assess further opportunities to deliver value from its existing assets and identify larger projects with suitable exploration targets and a clear path to development.?
Editing by Reiner Simanjuntak