REA Holdings halts coal mining operations at Kota Bangun

REA Holdings Plc, a UK-listed mining company, said it has halted its coal mining operations at Kota Bangun in central part of East Kalimantan after its principal contractor run into financial difficulties, which prompted the contractor to pull out from the project.

Mining operations at the Kota Bangun concession started in January 2011 and a total of some 20,000 tonnes of coal had been mined up to end June 2011. It had earlier planned to increase production during the second half of the year to a level of 16,000 tons a month..

?Whilst this development did not cause the group any direct financial loss, it has meant that mining operations at Kota Bangun have had to be temporarily halted,? the company said.

It said it is now reviewing its options for the Kota Bangun concession including, among others, contract mining or, alternatively, renting or purchasing new equipment and recruiting suitably qualified operators to enable the group itself to undertake overburden removal and coal extraction.

Liburdinding concession
Meanwhile, the company reported an improvement on its Liburdinding concession in the southern part of East Kalimantan.

The company believes that it will be able to sell the higher sulphur coal that the Liburdinding concession contains at prices that will permit profitable mining.

The company is currently conducting drilling program on the mining site. It expects to start production of the mining concession in the first quarter of 2012.

Overall, REA Holdings? sales of traded coal to the end of June 2011 amounted to 118,041 tons and a further 110,061 tons were sold during July and August.

The group said it remains on target to reach an average monthly level of traded coal sales of 100,000 tons by the end of 2011. (romel)