SINGAPORE (Yosefardi) – Geo Energy Resources Limited, through its subsidiary PT Mitra Nasional Pratama (MNP), had on 24 September 2013 entered into a mining services contract with PT Parisma Jaya Abadi (PJA).
On the same day, the Company’s subsidiary, Geo Coal International Pte. Ltd. (GCI) entered into a coal mining cooperation agreement with PJA.
PJA holds mining business permits for an area of 5,000 hectares located in the Kedung Murung and Lebak Mantan Villages, Kota Bangun and Muara Wis District, Kutai Kartanegara Regency, East Kalimantan Province.
Pursuant to the Mining Services Contract, MNP shall be exclusively appointed to provide mining services, comprising mainly overburden removal, in a specified area of approximately 150 hectares within the Work Block. MNP shall receive a service fee of US$2.50 (excluding value added tax) per bank cubic metre for overburden removal.
Pursuant to the Mining Cooperation Agreement, PJA and GCI have agreed to cooperate with each other to produce coal in the Work Block. PJA has agreed to sell and deliver the coal produced from the Work Block, exclusively to GCI. PJA has undertaken exploratory activities and guaranteed that the potential coal contained in the Work Block is approximately 420,000 metric tons of coal with calorific value in excess of 6,800kcal/kg (GAR).
GCI shall make an upfront payment of US$2.94 million to PJA within 14 days from the date of the Mining Cooperation Agreement.
Taking into account the aforementioned upfront payment, the purchase prices of coal under the Mining Cooperation Agreement shall be (i) US$61.55 per metric tonne of coal with calorific value in excess of 6,800kcal/kg (GAR); and (ii) US$71.55 per metric tonne of coking coal, both of which will be transacted on a FOB barge basis.