Release: Bumi Resources announces recent developments in its operation
Cost increase to impact company's 2005 revenues
Thursday, December 15 2005 - 03:21 AM WIB
The company also stated that it expected to reach its US1.6 billion sales target from an expected of 45 million tons sales volume for 2005.
BUMI Resources also explained several other issues impacting its performance for 2005, including:
Cost
The company's average fuel cost per liter in the third quarter of 2005 has increased by 46% to Rp.4897/liter from Rp.3350/liter at second quarter of 2005. In the third quarter of 2005, and the subsequent fuel prices hikes, the company's fuel purchase increased by 94% to Rp.738 billion, from Rp.380 billion in the second quarter of 2005.
The inrease in the company's cash cost for the third quarter of 2005 was attributable to the escalation of its stripping ratios at the PT Kaltim Prima Coal ("KPC") and PT Arutmin Indonesia ("Arutmin") mining sites. Due to the start up projects at the Bengalon and Bendili mines, the average stripping ratio at KPC has increased by 15:1 times in the third quarter of 2005, compared to 10:1 times in the second quarter of 2005. The average stripping ratio at Arutmin increased slightly to 6.8:1 times in the third quarter of 2005 from 6.7:1 times in the second quarter of 2005.
Coal Price
for the year of 2005, Bumi has committed to sell 43.7 million tons of coal; comprising 27.5 million tons by Arutmin with a weighted average price of US$34.75/ton.
Expansion Cost
As at end of September 2005, KPC?s expansion cost has increased to Rp 193 billion due to the start up costs at the Bendili and Bengalon projects.
Gearing ratio
In the third quarter of 2005, Bumi?s gearing ratio increased to 265% from 253% in the second quarter of 2005 on account of the US$ 600m structured export note issuance by Indocoal Exports (Cayman) limited, which was backed by a securitization of all existing and future coal sale receivables by KPC, Arutmin and Indocoal Resources.
Divestment
The company stated that the KPC divestment, as required in chapter 26 of the agreed Coal Contract of Work (CCOW); has been completed as pf October 2005. The Directorate General of Geology and Mineral Resources, through its letter number 1875/05/DJG/2005 dated 11 October 2005, and the Investment Coordinating Agency (BKPM) through its letter number 1218/III/PMA/2005 dated 17 October 2005, granted the 99 shares takeover of PT Sitrade Coal by the Company, PT Sitrade Coal owns 32,4% of KPC?s shares.
As a result of the divestment, the current KPC shares compositions is as follows:
Sanggata Holding Limited (SHL) 24,5%
Kalimantan Coal Limited (KCL) 24,5%
PT Kutai Energy Timur 5,0%
PT Bumi resources Tbk 13,6%
PT Sitrade Coal 32,4%
BUMI Resources owns 100% of SHL and KCL respectively. The company informed BAPEPAM, and the Jakarta and Surabaya Stock Exchanges of this change in KPC shareholders on 8 December 2005.
Export Tax
In response to the question regarding the recently imposed tax on exports of coal, BUMI Resources? CEO, Ari S. Hudaya said that the company will abide any regulation stipulated by the Government, but added that first generation coal mining companies will not be affected on account of KPC and Arutmin?s 1981 Coal Contract of Works exempting the companies from any new regulations until the end of the contract.
?The Government has started to understand that to attract new investors, we have to have a conducive investment climate which includes legal certainties, a stable macro economic environment and government regulations that are acceptable to both corporations and the Government itself?, he added.
Development in Expansion Plans
The company?s representative stated that there have been some setbacks to the operations and production at the coal mining sites.? We were excited during the start up of our Bengalon and Bendili Hill mine sites, but as it turned out, many external factors were hampering progress and there are some production figures that cannot be met. However, let me assure you that we are doing our utmost to remedy the situation and provide a more realistic figures for 2006?, said company CEO Ari S. Hudaya.
Shares Buy Back
Responding to a question on a plan by the company to buy back shares, Ari Hudaya said that any plan by BUMI Resources to buy back its shares would require approval from its shareholders at a General Shareholders Meeting (RUPS). ?We have not gone into details as yet on the price, volume or timetable. The main reason for our buy back announcement was to express our concern and commitment to our shareholders and investors given the fluctuation of Bumi?s stock prices?, he said.
About BUMI Resources
PT BUMI Resources Tbk, is one of the largest listing mining companies in Indonesia, with its two coal companies- PT Kaltim Prima Coal and PT Arutmin Indonesia comprising the company?s core business? along with its oil and gas subsidiary Gallo Oil (Jersey) Ltd and Enercorp Limited, its marketing agent for domestic buyers. (end of release)