A media conference was held at Jim Rogers’ home yesterday. The famed investor is also a non-executive director of mining specialist Geo Energy Resources.
Photos by Sim Kih
GEO ENERGY Resources, an Indonesian coalmining specialist, has signed a conditional sale and purchase agreement to acquire its fifth mine concession in 2013.
This concession, spanning 4,600 hectares, is estimated to contain average calorific value coal of 7,200 kcal/kg (GAR) and semi-coking coal, much higher than the 3,400 kcal/kg of the mine that the Group is currently operating.
Higher GAR values translate into higher average selling prices.
This deal closely follows on the heels of the proposed acquisitions of another 4 mining concessions announced in February, and brings the Group’s total proposed mine concession acquisitions to five year-to-date.
Its maiden BEK Mining Concession covers 4,570 hectares of land in Kutai Barat, East Kalimantan that contains 12.5 million tons of coal reserves.
"Coal miners who are profitable during the current down cycle will be even more profitable when the upturn comes," said Jim Rogers.“I joined Geo Energy with the confidence that the Group had the potential to expand its operations.
"The proposed acquisitions of the five mine concessions are, in my opinion, proof of the Group’s capacity to sustain its growth momentum,” said famed investor Jim Rogers, who is a non-executive director of Geo Energy.
A media conference was held at his home yesterday.
Geo Energy’s gross profit surged 36% in FY2012 to reach US$36.2 million, after it commenced operations of its maiden mining concession in February 2012 and produced about 964,000 tons of coal last year.
Prior to its IPO in October 2012, Group revenue came mainly from the sale of coal under its coal cooperation contracts with third party mine owners.
With the enactment of Indonesia’s new mining law that only allows mining to be carried out by the mine’s concession owners, Geo scaled back its coal cooperation contracts after September 2012.
It is still permitted to carry out land clearing, overburden removal and coal haulage for third party mine owners.
To address the change of regulations, the Group had embarked on an aggressive plan to acquire mining assets.
All five potential mine concessions are synergistically situated in areas neighboring the Group’s current BEK mine.
Geo Energy executive chairman Charles Antonny Melati (left) and CIO Mark Zhou at the media conference.In addition to the five potential acquisitions, the Group also recently announced that it had entered into mining services contracts as well as coal sale and purchase contracts in December 2012 and January 2013.
The latest deal is conditional on an independent technical report verifying that the acquisition target contains at least 40 million metric tons of coal.
Pending the independent technical reports commissioned by the vendors and pending shareholders’ approval, the Group targets to complete the acquisitions collectively by the end of the year.
“We expect our growth rates to be sustained by this acquisition,” said chief investment officer Mark Zhou at the media conference.
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