Resources Prima: Rinjani, CK sign deal on lower waste mining tariff, debt settlement
Monday, September 12 2016 - 02:10 AM WIB
SGX-listed Resources Prima Group Limited, a coal mining company with integrated operations including coal mining facilities in Indonesia, said that its subsidiary PT Rinjani Kartanegara has entered into an agreement with its waste mining contractor, PT Cipta Kridatama (CK), which provides for a further reduction of the waste mining rate charged by CK as well as an additional debt settlement repayment.
The company said in a statement last week that PT Rinjani and CK have agreed a reduction in the waste mining rate from US$2.00 per bank cubic meter (bcm) to $1.80 per bcm with effect from July 14, 2016, the date on which the second borrow-use permit for an area covering 897.56 hectares was awarded to PT Rinjani.
Assuming an average stripping ratio of 8.0, equivalent to PT Rinjani?s average stripping ratio for the six-month period ended June 30, 2016 (6MFYE12/16), the impact of the reduced waste mining rate could be a potential operating cost saving (excluding value-added tax) of approximately $1.60 per ton of coal produced. Actual savings will, among others, depend on the monthly stripping ratio of PT Rinjani?s mine, the company explained in the statement.
Waste mining cost was the largest component of the group?s cost of goods sold (COGS), accounting for approximately 51 percent of the group?s COGS in 6MFYE12/16. Any reduction in the waste mining rate will have a positive impact on the group?s gross profit margin, all other things remaining equal. During 6MFYE12/16, total overburden removed amounted to approximately 5,950,660 bcm. For illustration purposes, assuming all other things remaining equal, a reduction in the waste mining rate of $0.20 per bcm would have yielded cost savings of approximately $1.2 million during 6MFYE12/16.
Resources Prima said PT Rinjani and CK have also agreed to further amend the terms and conditions of the Debt Settlement Agreement, as disclosed in the circular to shareholders dated September 30, 2014 and as amended on March 29, 2016, such that PT Rinjani shall make additional debt repayments to CK equivalent to a certain dollar per ton monthly repayment over and above the previously agreed monthly repayment under the Debt Settlement Agreement and amendments thereto.
The actual additional repayment shall be determined and agreed on a monthly basis taking into consideration the actual cost savings made from the reduction in the waste mining rate, as described above. The additional monthly repayments shall not exceed the cost savings from the reduction in waste mining rate. PT Rinjani has also agreed to pay to CK a $200,000 payment to reduce the principal amount owing by PT Rinjani to CK under the Debt Settlement Agreement from $16.8 million to $16.6 million.
Save for the additional monthly debt repayments and the repayment of $200,000 of the principal amount owing, the terms and conditions of the Debt Settlement Agreement and amendments thereto shall remain unchanged and in full force and effect.
PT Rinjani has been granted a Production Operation IUP permit to carry out coal mining operations in an area covering approximately 1,933 hectares in the District of Loa Janan and Loa Kulu, Kutai Kartanegara Regency, Province of East Kalimantan. The tenure for the Mining Concession Area is held under the Production Operation IUP which was granted on November 24, 2009 and is valid until November 24, 2021.
Editing by Reiner Simanjuntak