Straits Asia Resources Ltd (SARL) has completed the agreements to acquire the shares of PT Separi Energi and the offtake rights to coal from its mines. Following completion of the acquisition, the Share Consideration and the Cash Consideration were paid to the Contract Seller and the Share Sellers.
Richard Ong, Chief Executive Officer said “This is an exciting growth phase for Straits Asia. The acquisition will further reinforce our position as a major thermal coal producer in Indonesia. We would like to thank the vendors for all their efforts in ensuring a seamless deal completion. We will now focus on integrating the mine into our operations and delivering on our planned growth initiatives.”
Jembayan is located approximately 150 km northwest of Balikpapan and about 70 km from the sea. The mine has been operating since 2004 with substantial year-on-year ramp up. For the financial year ending December 2007, Jembayan is estimated to produce some 4 Mt of coal. The concession covers a total area of nearly 13,000 ha. Using present records, an independent review of the coal deposits has identified non-JORC classified reserves and resources of approximately 41 Mt and 115 Mt, respectively. Only 48% of the total concession area has been explored, implying significant reserve and resource upside potential.
SARL intends to expand its thermal coal mining business in Indonesia. Ong has said, back in October: “Jembayan is an outstanding coal mine with excellent infrastructure. The acquisition will deliver immediate benefits to Straits Asia as it allows us to expand our 2008 production to a target of around 8.5 Mt to 9.5 Mt from our two mines. The coal quality is of higher grade and contains low sulphur which is the kind of quality that our customers demand. By acquiring the Jembayan mine, we also diversify our risk of relying on a single mine. Furthermore, Straits Asia will embark on an extensive exploration programme over the next 12 months to prove up and expand the Jembayan resource base to JORC standards. We believe the exploration upside is significant.”
“Our growing production and resource base, and the strong outlook for thermal coal prices provide us the platform to grow further, and deliver outstanding returns to our shareholders. We therefore maintain our positive outlook for thermal coal prices, and this acquisition reinforces our positive view about doing business in Indonesia.”