Straits reports higher Q2 coal production, sales
Friday, August 13 2010 - 10:03 AM WIB
Jembayan achieved record production of 2.5Mt during Q2 2010 and remains well placed to achieve its medium term objective of 12Mtpa. The production target range for 2010 is 8.0 ? 8.5Mt.
Given the strong performance to date at Jembayan the current expectation is for the full year production number to be at the higher end of this range. Cash costs for Q2 2010 reduced to $46.98 per tonne (Q1 2010: $49.80 per tonne; YTD average: $48.20 per tonne).
This reduction is the result of slightly lower strip ratios, reduced use of third party load-out facilities (by increasing the throughput efficiency of the original loading train) and better efficiencies in the coal handling process (particularly at the load out area).
Construction of Jembayan?s new Coal Handling Facility (CHF#2) is underway with most civil works completed. The new CHF#2 is expected to be completed and operational for the start of 2011. When commissioned, the new line will bring Jembayan?s total installed infrastructure capacity to a nominal 12Mtpa.
Product stocks decreased in Q2 2010 (from the levels recorded over the previous two quarters), with coal stocks of 654kt at the end of Q2 2010 compared to 795kt in December 2009 and 894kt in March 2010.
This trend mirrors the improvements made in the management and optimization of the permanent and temporary coal loading facilities over the past six months and this trend is expected to continue into the second half of the year.
Meanwhile, Sebuku?s Q2 2010 performance was generally in line with expectations. Work continued to concentrate on overburden removal and replenishing in-pit inventory. Commensurate with the budget mine plan for 2010, the strip ratio and cash costs moved slightly lower in the second quarter.
This trend is expected to continue throughout the remainder of 2010 as the mine receives the benefit of the H1 preparation work to uncover more coal in the pit.
Cash costs at Sebuku were lower in Q2 at $52.31 per tonne (Q1 2010: $54.01 per tonne; YTD average: $53.06 per tonne). Production of 199kt was marginally lower than Q1 2010 due mainly to poor weather in May and June.
Rainfall can affect production significantly at Sebuku, which located in South Kalimantan at the present time because mining is concentrated in a limited area giving few options to vary the schedule of extraction for either waste or coal.
Straits Asia has benefitted from strengthening international coal prices in the first half of the year with approximately 30% of 2010 sales priced on a floating or index linked basis.
Prices for a number of term contracts have been settled in Q2 2010 in line with Indonesian benchmark settlements and reflecting Indonesia?s freight advantage over Australia.
Average selling price (ASP) for Q2 2010 was USD$72.17 per tonne (YTD ASP: $71.54 per tonne) and within ASP guidance range for 2010 of $70 to $75 per tonne.
Lower production from Sebuku has been more than offset by higher production from Jembayan resulting in an overall shift in the sales portfolio.
A number of trials for Jembayan coal have been successfully concluded including trial cargoes/spot shipments to China and the mine has also established an ongoing capability to load Capesize vessels. Straits Asia is well positioned to benefit further from the continued growth in demand patterns now being widely forecast in emerging markets.
The team continues to focus on its strategy of developing a recognized brand for Jembayan products with incremental pricing benefits. At the same time, better efficiencies in shipping management and scheduling have helped to reduce demurrage exposure.
During H1, the exploration team continued to work on a detailed, in-fill drilling programme at Jembayan and are now close to completing the modelling work on this programme.
An upgraded JORC Resource and Reserves statement for Jembayan will be released in August 2010. Plans are advanced for the exploration team to mobilise to Sebuku to commence drilling on the Northern Leases as soon as the new permit has been issued.
As an overall objective, Straits Asia will seek to maintain an ongoing inventory of JORC Reserves that will form the foundation of a robust and detailed ?Life of Mine Plan?.
The focus of the exploration team is to deliver a high level of confidence in the production schedule together with well defined quality controls. (denny)
| Kt | 3 months Ended 30 June | 6 Months Ended 30 June | ||
Sebuku |
2010 | 2009 | 2010 | 2009 |
| Coal mined | 219 | 505 | 504 | 1,153 |
| Product coal | 199 | 402 | 443 | 933 |
| Sales | 267 | 455 | 479 | 858 |
| Jembayan | ||||
| Coal mined | 2,315 | 1,521 | 4,395 | 2,772 |
| Product coal | 2,465 | 1,483 | 4,556 | 2,714 |
| Sales | 2,591 | 1,646 | 4,593 | 2,895 |
| Total | ||||
| Coal mined | 2,534 | 2,026 | 4,899 | 3,925 |
| Product coal | 2,664 | 1,884 | 4,999 | 3,647 |
| Sales | 2,858 | 2,101 | 5,072 | 3,753 |