Geo Energy Resources Ltd., has submitted a revised non-binding proposal to acquire new coal assets for a producing coal mine in East Kalimantan - Photo by the Company

JAKARTA (TheInsiderStories) – Coal producer, Geo Energy Resources Ltd., has submitted a revised non-binding proposal to acquire new coal assets for a producing coal mine in East Kalimantan and Sumatera, said the company today (08/30). No further details on the plan.

If the transaction proceeds, it is “likely to represent a very substantial acquisition” under the Singapore Exchange listing rules, said the producers.

Geo Energy is a coal mining group, established since 2008, with offices in Singapore and Jakarta and production operations in Kalimantan. The company has been listed on Singapore Stock Exchange (RE4) since 2012 and is part of the Singapore FTSE index.

Geo Energy owns four mining concessions through its wholly-owned subsidiaries PT Bumi Enggang Khatulistiwa (BEK), PT Sungai Danau Jaya (SDJ), PT Tanah Bumbu Resources (TBR) and PT Surya Tambang Tolindo (STT) in East Kalimantan.

In the first quarter of 2019, the company had a cash balance of US$206 million, which it plans to use to acquire a coal mine in the near term to improve its credit profile.

Geo Energy has had a coal off-take contract for all export-related production at the TBR mine with Macquarie Bank Limited (A2 stable) since November 2018. The terms of the agreement have not been publicly disclosed.

However, typically, coal off-take contracts will contain force majeure provisions that include severe weather. This protects coal miners from incurring penalties if they are unable to deliver contracted volumes under a force majeure event.

Globally, coal mining companies, have already experienced significant credit pressure because of environmental risks Moody’s reported there are 11 sectors with $2.2 trillion debt have elevated environmental risk exposure. These risks include natural and man-made hazards.

According to the global research company, Wood Mackenzie, Kalimantan province, where Geo Energy’s mines are located, is subject to seasonal weather conditions including excessive rainfall, which can disrupt mining operations.

by Linda Silaen, Email: linda.silaen@theinsiderstories.com