Strike updates Berau Coal project
Monday, May 3 2010 - 05:13 AM WIB
Berau Thermal Coal Project - E. Kalimantan (SRK 100%)
Project Development
During the March quarter and to the date of this Report:
Strike?s Berau Coal Project received approval for its Environmental Impact Analysis (Analisis Mengenal Dampak Lingkungan or AMDAL) from the Regent of Berau in January.
Company Projects
? In February the project mineral concession was converted to a Mining Production Operations Licence (Izin Usaha Pertambangan Operasi Produksi or IUP Production Operations) under Indonesia?s new Mining Law. Obtaining the IUP Production Operations is a key pre-requisite for the conduct of mining activities. This Licence allows the mining and sale of coal, subject to final approval of the first year?s annual budget and work plan by the Regent of Berau. The proposed budget and work plan have been submitted for approval and the Regent?s comments have been received. A response to the comments will be Lodged shortly and approvals are expected during the current quarter.
? Ancillary permits still to be obtained include permits relating to road and port construction. An application to construct and operate a coal barging port on the Segah River, 30km from the proposed mine, has been Lodged.
? Negotiations with local communities, land owners, concession holders and the Forestry Department to secure approvals to use land for road construction are underway and expected to be completed during the June Quarter.
? Mining tenders have been received and discussions and clarification meetings commenced with tenderers. This work will continue during the June quarter with a view to awarding the mining contract shortly after an investment decision on the Project.
? The Project partners are working constructively to ensure the contractual arrangements are consistent with the new Indonesian Mining Laws (see below) prior to an investment decision. In parallel with this process the partners will assess the development options for the Project.
Indonesian Mining Law
A new Mining Law came into force in Indonesia In January 2009. The new Law is being supplemented by implementing regulations. The Indonesian Government is issuing the regulations in installments. The majority of the regulations have now been issued, including the Mining Services Regulation. The new Mining law, as supplemented by this Regulation, prohibits a concession owner from receiving fees for work performed by a mining services provider, and prevents concession owners from contracting out certain aspects of their mining and processing activities.
This has 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 Co-operation Agreement.
After reviewing and taking advice on these matters, Strike and the concession owner are in discussions about potential amendments to the contractual arrangements between them to ensure that they remain consistent with the new Mining Law and Regulations, whilst preserving the economic substance of their original agreement. Whilst Strike is proceeding on an operational basis towards mine commencement, awaiting the issue of the new Mining Regulations and the negotiations following from that have resulted in a delay to the project commencement timetable. (end of excerpt)