White Energy updates E. Kalimantan coal upgrading project
Tuesday, July 31 2012 - 02:23 AM WIB
1. PT KALTIM SUPACOAL (?KSC?) ? JOINT VENTURE WITH PT. BAYAN RESOURCES (?Bayan?) - WEC 51%
As previously advised to the market, the shareholders of KSC, a White Energy subsidiary and Bayan, are currently in dispute over matters relating to the Tabang coal upgrading plant, located at Bayan?s Tabang mine in East Kalimantan, Indonesia.
On 27 December 2011, White Energy?s wholly owned subsidiaries, BCBC Singapore Pte Ltd (?BCBCS?) and Binderless Coal Briquetting Pty Limited (?BCBC?), commenced legal proceedings in the High Court of the Republic of Singapore against Bayan.
The issues in the legal proceedings include a claim by BCBCS and BCBC against Bayan for damages for breach of the Joint Venture Deed between the KSC shareholders, including the obligation to supply coal to KSC and the obligation to provide funding to KSC. Bayan has filed a defence to the claim, and also a counterclaim against BCBCS and White Energy seeking damages.
On 21 February 2012 Bayan gave BCBCS notice purporting to terminate the Joint Venture Deed. BCBCS considers that, among other matters, Bayan?s purported termination amounts to a wrongful repudiation of Bayan?s obligations, entitling BCBCS to terminate the Joint Venture Deed.
BCBCS accepted Bayan?s repudiation, which brought the Joint Venture to an end. BCBCS is pursuing Bayan for all damages suffered as a result of Bayan?s wrongful repudiation, which has brought the joint venture to an end.
On 5 April 2012, following an application by BCBCS, the Supreme Court of Western Australia made interim freezing orders in respect of Bayan?s 56% shareholding in Kangaroo Resources Limited, a publicly listed Australian company. On 18 April 2012, following a further hearing in this matter, the Court extended the freezing orders indefinitely. The orders will remain in place unless and until there is a further order made by the Court. Bayan has foreshadowed a potential challenge to the grant and scope of those orders, and has commenced a challenge to the Court?s jurisdiction to make such orders (including on constitutional grounds).
Status of Tabang Operations
As a result of the above dispute, KSC suspended operations at the Tabang plant in late November 2011. The Tabang site has since been placed on care and maintenance program, with around 15 staff remaining on site who are responsible for managing the site. They are being supported by a small number of administrative staff in KSC?s Balikpapan office. All other staff were terminated in late December 2011.
At the time of suspension of operations at Tabang, the various plant modification works being undertaken at site were over 95% complete.
The directors believe that BCBCS took all steps to fulfil its joint venture obligations and that the failure of the Joint Venture is due to Bayan?s failure to supply coal and provide funding to KSC and its purported termination of the Joint Venture Deed.
2. OTHER BUSINESS DEVELOPMENT INITIATIVES
White Energy representatives in Indonesia continue to work with PT Tri Mitra Bayany (?TMB?) and other parties to identify and explore coal deposits in Indonesia.
As outlined in previous reports, the coal properties being considered by White Energy comprise a mixture of coal qualities. Most of the resources are likely to be suitable for upgrading using the BCB technology, which has the potential to greatly enhance the value of such projects. In addition, the Company also expects that some of the resources in question will not require application of the BCB technology, and can be mined and sold directly into the export markets. (end of excerpt)