Resources Prima signs revised agreements with waste mining contractor
Friday, April 1 2016 - 01:14 AM WIB
SGX-listed integrated coal mining company Resources Prima Group Limited announced Wednesday revised agreements entered into on March 29 between its Indonesian coal mining subsidiary PT Rinjani Kartanegara and its waste mining contractor, PT Cipta Kridatama (CK), which have resulted in the following changes:
? a reduction in the waste mining rate of US$0.25 per bank cubic metre (bcm); and
? an extension to the debt repayment deadline from December 31, 2016 to December 31, 2018.
The statement said that PT Rinjani and CK have agreed on a reduction in the waste mining rate of US$0.25 per bcm from $2.25 per bcm to $2.00 per bcm with effect from October 2015. Assuming an average stripping ratio of 8.8 bcm of overburden per ton, equivalent to PT Rinjani?s average stripping ratio for the nine-month period ended December 31, 2015 (9MFYE15), the impact will be a potential operating cost saving (excluding value-added tax) of approximately $2.20 per tonne of coal. Actual savings will depend on the monthly stripping ratio of the Group?s mine.
Resources Prima said Waste mining cost was the largest component of the group?s cost of goods sold (COGS), accounting for approximately 63.8 percent of the group?s COGS in 9MFYE15. As a result, any reduction in the waste mining rate will have a positive impact on the group?s gross profit margin.
During 9MFYE15, total overburden removed amounted to approximately 10,811,000 bcm. Purely for illustration purposes, assuming all things being equal, a reduction in the waste mining rate of $0.25 per bcm would have yielded cost savings of approximately $2.7 million during 9MFYE15.
PT Rinjani and CK have also reached an agreement to restructure the outstanding debt owed by PT Rinjani to CK comprising two amounts of approximately $17.2 million and Rp 9.1 billion as at December 31, 2015. Pursuant to the amendment agreement, the deadline for full repayment of the outstanding debt to CK has been extended from December 31, 2016 to December 31, 2018 with monthly repayments pursuant to the following schedule:
? the higher of $1.50 per ton of coal sold or $180,000 per month for 2016;
? the higher of $2.00 per ton of coal sold or $330,000 per month for 2017 and 2018; and
? full and final settlement of any balance of the debt outstanding to be made by December 31, 2018.
The monthly repayments shall be subject to: (i) a minimum monthly ICI 2* coal price, after adjusting to a Free On Board Barge basis and to account for PT Rinjani?s coal quality, of $38.00 per tonne; and (ii) a maximum cumulative stripping ratio of 9.0 bcm of overburden per tonne. If either of these conditions is not met for a particular month, no debt repayment is required for the respective month.
Save for the extension of the repayment period and the change in repayment terms based on coal sales tonnages to the extent expressly varied or amended by the provisions of the Amendment Agreement, the terms and conditions of the Debt Settlemen Agreement between PT Rinjani and CK remain as disclosed in the circular to shareholders dated 30 September 2014 and shall remain unchanged in full force and effect.
Rinjani operates a 1,933-hectare coal concession in Kutai Kartanegara, East Kalimantan, and is currently waiting for the so-called borrow and use forestry permit from the Indonesian Ministry of Forestry.
Editing by Reiner Simanjuntak