Strike Resources updates Berau coal project
Monday, November 1 2010 - 02:15 AM WIB
Berau Thermal Coal Project ? Indonesia (SRK 100%)
Project Development
During the September quarter progress continued towards development of the Berau thermal coal project including:
? Continuing discussions with our Indonesian partner PT Kaltim Jaya Bara (PT KJB) on the preferred partnership structure and development option for the project. These discussions are continuing into the December quarter. A successful conclusion to the negotiations will enable an investment decision on the project shortly thereafter.
? The budget and work plan submitted as a requirement under the Mining Production Operations License (Izin Usaha Pertambangan Operasi Produksi or IUP Production Operations) under Indonesia?s new Mining Law has received official written approval from the relevant authority in Berau.
? Earlier advice from our partner PT KJB that Central Forestry had given approval for the alignment of the proposed coal haul road from the proposed mine site to the barge port on the Segah River, as reported in the June quarter, has proved to be premature. While the approval was given by a Department within Central Forestry during the June quarter, another Department within the same agency has since claimed jurisdiction over the matter. Our joint venture partner PT KJB advises that the resolution of this matter is underway.
? Tender analysis and review of key capital and operating contracts continued during the quarter. This work is aimed at confirming the key cost components for the project and facilitating the award of the mining and haul road contracts shortly after an investment decision is made.
? Cataloguing of tree species and quantities to be affected by proposed clearing works was completed during the quarter and lodged with Regional Forestry in Berau. Formal acceptance of the report from Regional Forestry is expected during the December quarter.
Indonesian Mining Law
Strike and the concession owner are in discussions about potential amendments to the contractual arrangements between them to ensure that they remain consistent with Indonesia?s new Mining Law and Regulations, which have been promulgated in instalments since January 2009.
While Strike?s contract with the concession owner remains valid under the new law, these changes have created a degree of uncertainty with respect to Strike?s obligations to carry out certain aspects of mining operations and make payments to the Berau concession owner under the contract.
After reviewing and taking advice on these matters, Strike and the concession owner are in discussions about potential amendments to their contract to ensure that it remains consistent with the new Law and Regulations, whilst preserving its economic substance. Whilst Strike is proceeding on an operational basis towards an investment decision and potential mine commencement, ongoing negotiations have resulted in a delay to the investment decision timetable. (end of excerpt)