White Energy updates E. Kalimantan coal upgrading project
Tuesday, October 30 2012 - 06:55 AM WIB
1. PT KALTIM SUPACOAL (?KSC?) ? JOINT VENTURE WITH PT. BAYAN RESOURCES (?Bayan?) - WEC 51%
Update on Legal Dispute
As previously advised to the market, the shareholders of KSC, BCBC Singapore Pte Ltd (?BCBCS?), 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, 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.
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.
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. Bayan has sought to challenge the grant and scope of those orders, and in this regard has commenced a challenge to the Court?s jurisdiction to make such orders (including on constitutional grounds). Bayan initially commenced its challenge in the High Court of Australia but the High Court remitted the matter back to the Supreme Court of Western Australia. The challenge will be heard by the Supreme Court in February 2013. The orders will remain in place unless and until there is a further order made by the Court.
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 was subsequently placed on a care and maintenance program.
At the time of suspension of operations at Tabang, the various plant modification works being undertaken at site were over 95% complete.
Following a petition filed by a number of local creditors of KSC in the Commercial Court of Surabaya, Indonesia, administrators were appointed to KSC. Further to an order of the Court, KSC has now been placed into bankruptcy and Curators have been appointed to manage this process. All KSC staff have now been terminated from the Tabang site and a small number of administrative staff remain in KSC?s Balikpapan office in order to assist the Curator with the bankruptcy process.
As shareholders are aware, the White Energy Group has previously fully impaired its investment in KSC and as such the bankruptcy process will not have any further impact on the accounting results of the White Energy Group.
2. OTHER BUSINESS DEVELOPMENT INITIATIVES
White Energy representatives in Indonesia continue to work with several 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)