Straits acquires more coal mines at Sebuku

Singapore Exchange-listed coal miner Straits Asia Resources Limited announced on Thursday it had signed sales and purchase agreements to acquire two coal mines to the north of its existing operations on Sebuku Island.

The acquisition is subject to final due diligence and the consideration payable is US$25 million cash on completion.

An additional contingent payment of approximately $114 million will be made upon satisfaction of additional conditions which include obtaining relevant Indonesian government approval to re-classify certain areas within the mining concession, and obtaining relevant approvals to commence mining activities within the area.

The two areas owned by PT. Metalindo Bumi Raya and PT. Karbon Mahkam contain coal deposits that lie in un-mined areas immediately adjoining the Group?s own Coal Contract of Work, and extending some 6 kilometres northwards.

Two independent reviews of the coal deposits utilizing drilling conducted between 2003 and 2005 have identified approximate known resources of between 34 and 50 million tonnes.

Straits Asia will immediately embark on an extensive exploration programme over the next 12 months on the new areas in order to prove up the resource base to JORC standards.

?Having access to these deposits which are of similar quality to our Sebuku coal, is very beneficial to Straits Asia which has the infrastructure in place on Sebuku Island to exploit these deposits. It also helps to consolidate the Group?s exclusive mining position on Sebuku Island, giving it significantly greater flexibility in the planning of its mining operations there,? CEO Richard Ong said.

Straits Asia has identified approximately 4 million tonnes of coal available for mining immediately. From the reports of two independent technical reviews, significant additional resources will become available upon satisfaction of conditions precedent relating to the US$114m contingent payment, and beyond this, the outcome of an extensive drilling program across both areas.

Straits Asia is a unit of Australian miner Straits Resources Limited.(alex)