Release: Straits Asia Resources Limited: Update on mine operations
Wednesday, June 25 2008 - 02:21 PM WIB
As was stated in our Chairman?s Annual General Meeting address on 30 April 2008 and also in our first quarter report on 15 May 2008, Straits Asia is on target to produce approximately 9.0 million tonnes of coal in 2008, with approximately 5.0 million tonnes and 4.0 million tonnes contributed by the Jembayan and Sebuku mines respectively.
We have experienced strong production performances during the first quarter of 2008, which has traditionally been a wet period and the weakest quarter in production terms. Straits Asia produced 1.20 million tonnes and 0.95 million tonnes from Jembayan and Sebuku respectively during this quarter.
We continue to invest in on-mine infrastructure to increase production capacity at both mines, with the installation of a second wash plant at Sebuku and the increase of coal stockpiling and barge loading facilities at Jembayan well underway. This capital expenditure will be adequate to increase our total annual production capacity to 19.0 million tonnes (11.0 million tonnes and 8.0 million tonnes at Jembayan and Sebuku respectively). We are therefore well placed to have the ability of producing approximately 14.0 million tonnes per annum in the medium term and additional production beyond that.
We remain confident that our 2009 production levels will meet our target of 11 million tonnes.
We note recent market speculation about the perceived risks relating to the boundary extension at Sebuku being delayed as a result of alleged corruption investigations into the Indonesian forestry department. Straits Asia is not in a position to comment or speculate on the affairs of the Indonesian forestry department. However, Straits Asia firmly believes that no such investigations (if they exist) have any relevance to the process being followed by Straits Asia.
Straits Asia is in the final stages of its approvals process and continues to make progress towards its approvals at Sebuku being granted. Although there can be no certainty, Straits Asia is confident based on the current process that the Sebuku approvals will be concluded before the end of the 2008 calendar year. Straits Asia continues to prepare its plans on this basis.
As mentioned previously, the integration of Jembayan has gone smoothly and we are spending much effort on drilling out the Jembayan resource. We expect to be making more announcements over the coming months in relation to Jembayan, its reserves, resources and production capacities, as well as an update on the boundary line movement at Sebuku. Our management team remains fully focussed and committed on growing production in this strong coal market environment.
The market price for seaborne thermal coal has continued to remain robust, driven by strong demand from end users. It was previously communicated that Straits Asia has committed and priced approximately 7.9 million tonnes of its 2008 production. We have since then taken advantage of the strong market conditions and are pleased to report that approximately 9.0 million tonnes of our 2008 production has now been committed at an average price of US$70.50 per tonne.
Approximately 1.9 million tonnes of our 2009 production (which mainly relates to the extension of certain 2008 contracts) has already been committed at an average price of US$66.00 per tonne. The balance of our 2009 production remains unpriced and accordingly the Company is very well placed to take full advantage of these strong coal market conditions.(end of release)