PEFINDO affirms “idA” ratings to PT J Resources Nusantara and its MTN
Thursday, March 14 2019 - 10:08 AM WIB
(March 14, 2019)--PEFINDO has affirmed its “idA” ratings to PT J Resources Nusantara (JRES), its Medium Term Note (MTN) I/2017, MTN II/2017, MTN III/2017, and MTN IV/2018. The outlook for the corporate rating is “stable”. An obligor rated idA has a strong capacity to meet its long-term financial commitments relative to that of other Indonesian obligors. However, it is somewhat more susceptible to the adverse effects of changes in circumstances and economic conditions than higherrated obligors.
The corporate rating reflects JRES’ sizeable mining reserves and resources, low cash cost, and the high demand for gold. The rating is constrained by its aggressive capital structure, exposure to the fluctuation of gold prices and unfavorable weather, and risks related to the development of new mines.
The rating may be raised if JRES improves its capital structure, as indicated by a debt to EBITDA ratio below 2.0x on a sustained basis, while maintaining its profitability margin and low cash cost position. This should also be supported by an increase in its mining reserves and gold production volume on a sustained basis. The rating will be lowered if JRES aggressively finances its expansion with substantially larger debt than projected, without being compensated by stronger revenue and/or EBITDA generation. A significant drop in the gold price may also trigger rating downgrade since it could adversely affect the Company’s financial profile.
JRES was established in 2003 under the name PT Bara Kutai Energi. It is a subsidiary of PT J Resources Asia Pasifik Tbk (PSAB), the largest Indonesian listed gold producing company. Its operations cover the exploration, mining, and processing of gold. It has a geographically diverse portfolio of assets across Indonesia and Malaysia, specifically in Penjom (Malaysia), Seruyung (North Kalimantan), Bakan, Lanut, Pani, Doup, Bolangitang, and Bulagidun in North Sulawesi. As of December 31, 2018, it had four producing mines, two mines in the development stage and two in the exploration stage. As of December 31, 2018, its shareholders were PT J Resources Asia Pasifik Tbk (99.99%) and Jimmy Budiarto (0.01%). (ends)