Straits Asia's coal output increases in Q3

Singapore Exchange- listed coal mining firm Straits Asia reported Tuesday that the production during July-September period of 2010 of its coal mines in Kalimantan reached 2.72 million tons, a slight increase compared the same period of last year's output of 2.59 million tons

The company has two mines, that is Jembayan mine in East Kalimantan and Sebuku mine in South Kalimantan.

Production at both mines was affected by heavy rainfalls during a period in which Indonesia normally has dry season. Jembayan mine lost approximately 15 percent of production time due to rainfall, slightly above long term averages whilst Sebuku mine suffered a loss of over 40 percent. Despite the wet and slippery conditions, both mines maintained excellent safety records.

Despite heavy rainfalls, Jembayan?s coal output increased to 2.56 million tons, up around 25 percent and 4 percent compared to the same quarter 2009 and previous quarter, respectively.

Jembayan is still on track to meet its target of 8-8.5 million tons for this year.

As far as Sebuku mine is concerned, coal output there dropped to only 166,000 tons in third quarter of this year from 525,000 tons in the same period of 2009.

?At Sebuku, the effects of the weather were much more severe. Sebuku?s operations are now confined to limited working areas within the single Tanah Putih pit and unlike Jembayan mine, it does not have the flexibility to move production around a large area or to optimise extraction sequences within a number of working pits. As a consequence, full scale stoppages are largely unavoidable when heavy rain hits the Island. To put this in context, Sebuku suffered disruptions to operations on 76 of the 92 days in the quarter. However the planned production volume from Sebuku was already low and therefore the impact on Group results this year is less significant,? the company said.

The effect on the Sebuku mine plan is that the overall target for the year has been reduced by about 500,000 from 1.5 million tons of initial target with a consequent knock-on effect and delay on the ramp up target for 2011.

The company?s average selling price (ASP) for the third quarter of 2010 was US$71.51 per ton, down from $78.47 per ton in the same period of last year. For January-September period the company?s ASP reached $71.59, also decreased compared to the same period 2009 of $82.26 per ton

Cash costs for Jembayan of $46.91/ ton were better than target with the improvement attributable to lower strip ratios, higher volumes and improved efficiency of the coal handling chain.

Cash costs at Sebuku of $47.13/ ton continued their expected downward trend but were still well above target as a result of the severe weather conditions and the limit on potential volume increases that this caused. The primary driver of the reduction was lower strip ratios. Given the scale of the Jembayan operation relative to Sebuku, the Sebuku cash costs had a minor impact on the overall Group numbers. (denny)

Kt	3 months Ended 30 September		9 Months Ended 30 September
Sebuku	2010	2009	2010	2009
Coal mined	180	621	684	1,774
Product coal	166	525	609	1,458
Sales	132	503	611	1,361
Jembayan
Coal mined	2,297	2,038	6,692	4,810
Product coal	2,557	2,068	7,113	4,782
Sales	2,609	2,099	7,201	4,994
Total
Coal mined	2,477	2,659	7,376	6,584
Product coal	2,723	2,593	7,722	6,240
Sales	2,741	2,602	7,812	6,355