Rinjani coal production halted due to financial problems
Thursday, June 29 2017 - 03:02 AM WIB
SGX-listed coal mining firm Resource Prima Group Limited reported on Thursday that its main subsidiary?s mining operations in Kutai Kartanegara, East Kalimantan, has been stopped since June 23, due to inability to meet financial obligation to mining contractor.
The company said PT Rinjani Kartanegara (Rinjani) is unable to pay contractor PT Cipta Kridatama (CK) on time as coal production and sales were reduced due to rainfall and dewatering problems at the mine.
RK?s inability to pay the US$2.5 million- comprising the remaining balance of the waste mining costs for the months of April and June 2017 and equipment rental costs from prior years- triggered a cross-default clause of the Debt Settlement Agreement with CK, resulting in the full amount of outstanding debt owed to CK by Rinjani, amounting to approximately $15.1 million at 31 May 2017, becoming immediately due and payable.
Rinjani also on June 14, received tax assessment letter demanding $5 million in corporate taxes payment.
The company said that Rinjani has contacted CK to negotiate the recommencement of waste mining operations and a rescheduling arrangement of all current amounts owed to CK.
On 28 June 2017, Rinjani received confirmation from CK of its willingness to meet representatives from Rinjani to discuss all relevant matters. As part of any potential negotiation with CK, Rinjani will explore the possibility of CK increasing production to economic levels thereby returning the company to profitability, the company said.
As a result of its Rinjani?s ability to meet its financial obligation Resources Prima board has requested trading suspension for its shares.
Resources Prima reported coal production of around 220,000 tonnes in the Jan-March quarter of 2017, fell from 490,000 tonnes from last year?s corresponding quarter.