Straits acquires Jembayan coal mine

Singapore Exchange-listed miner Straits Asia Resources Limited announced Wednesday that it had entered into a definitive sale and purchase agreement to acquire a 100% interest in the Jembayan coal mine in East Kalimantan for US$350 million.

The company said it would pay $275 million in cash and shares equals to 6.9 % of Straits Asia?s enlarged issued share capital.

Jembayan is located approximately 150 kilometres North West of Balikpapan and approximately 70 kilometres from the sea.

The mine has been operating since 2004 with substantial year-on year ramp up. For the financial year ending December 2007, Jembayan is estimated to produce approximately 4.0 million tonnes of coal.

The Jembayan concession covers a total area of nearly 13,000 hectares. Using present records, an independent review of the coal deposits has identified non-JORC classified reserves and resources of approximately 41 million tonnes and 115 million tonnes respectively.

Only 48% of the total concession area has been explored, implying significant reserve and resource upside potential.

?The acquisition will deliver immediate benefits to Straits Asia as it allows us to expand our 2008 production to a target of around 8.5 million tonnes to 9.5 million tonnes from our two mines. The coal quality is of higher grade and contains low sulphur which is the kind of quality that our customers demand. By acquiring the Jembayan mine, we also diversify our risk of relying on a single mine. Furthermore, Straits Asia will embark on an extensive exploration programme over the next 12 months to prove up and expand the Jembayan resource base to JORC standards,? CEO Richard Ong said.

Macquarie Securities (Asia) Pte Limited is acting as financial advisor to Straits Asia on the transaction.

Straits Asia is a unit of Australian miner Straits Asia Resources Limited. Straits currently operates Sebuku mine in South Kalimantan and has just announced acquisition of two coal mines near its present mine. (alex)