The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region
Issue link: https://asiaminer.epubxp.com/i/830355
Volume 14 • Issue 2 | 2017 | ASIA Miner | 21 Indonesia INDONESIA'S second largest coal miner, PT Adaro Indonesia, expects to produce up to 54 million tonnes of coal this year, which is roughly equivalent to 2016 production of 52.6 million tonnes. The company is PT Adaro Energy's core coal operating subsid- iary, with other parent company activities in- cluding barging, shiploading, dredging, port services, marketing and power generation. Adaro produces thermal coal from min- ing sites in Kalimantan Selata and its sub- sidiaries include PT Alam Tri Abadi and PT Saptaindra Sejati. The company's coal is marketed under the brand name Envirocoal. The 2016 production figure was within the guidance range and included 200,000 tonnes from Adaro MetCoal (AMC). Sales for 2016 increased slightly to 54.1 million tonnes but the average selling price declined 8% compared to the same period in 2015. According to the company's audited con- solidated financial statements for 2016, the company booked US$2.524 billion of rev- enue in 2016, a 6% decline from the same period in 2015. The financial statement further noted that the company's cost of revenue decreased 14% to US$1.839 billion due to a lower strip ratio, continuous efforts to boost efficiency and lower than expected fuel prices. Due to the lower revenue, the royalties to the Government of Indonesia that account- ed for 14% of the total cost of revenue, fell 6% to US$259 million. Core earnings rose 35% to US$398 mil- lion, reflecting the strength of after-tax earnings derived from the solid core busi- ness of the company. The consolidated financial statement further noted that, the company's core earnings excluded among others US$91 million amortisation of mining properties, US$197 million gain on acquisition, US$110 million impairment of goodwill, and US$24 million impairment of mining properties. Total assets increased by 9% to US$6.522 billion and current assets increased by 46% to US$1.593 billion, mainly due to a high- er cash balance and trade receivables. Non-current assets increased by 1% to US$4.930 billion. KINGSROSE Mining has raised $6.4 million via a secured convert- ible loan facility to assist with the ongoing restructure of its financial arrangements and operations at the Way Linggo Project in Sumatra. Administrators advise that the funds will be applied to the ongoing restructure of the company, to provide working capital and to pro- vide funding to its 85%-owned subsidiary PT Natarang Mining (NM), owner and operator of the project. The convertible facility, which has been provided by a group of professional and sophisticated investors, can be converted to eq- uity at four cents per share, although this will require shareholder approval. If the loan is not converted to equity, Kingsrose is required to repay it on the latter of termination of the administration or any deed of company arrangement which may be entered into by Kingsrose. The funding to PT NM will be provided progressively over the next few months and will be used by PT NM to supplement its working capital requirements while further capital development is undertaken at Way Linggo to enable the operation to become cashflow-positive. Administrator Michael Ryan said, "The convertible facility is an im- portant step in the restructuring process and will assist with the re-organisation of the operations at Way Linggo. "We have made strong progress and we will continue to work alongside the management of Kingsrose as we move towards bringing Kingsrose out of administration and resumption of trading in its shares." As a result of this fundraising, the debt restructuring arrangements with Kingsrose's secured lenders, Michael John Andrews, Great Golden Investment Ltd (GGIL) and Beaurama Pty Ltd, are now ef- fective. Under the terms of the Beaurama agreement, the Beaurama debt of A$4.4 million will now be unsecured with no further interest accruing until July 2020 after which interest will accrue at 5% per annum, payable monthly in arrears. To the extent it has not been re- paid earlier, the Beaurama debt will be deferred to a single payment due on November 30, 2023. It is anticipated that based on executed agreements received, a total of 264 million shares will be issued under the convertible facility and the Michael John Andrews and GGIL debt to equity conversion. The new shares will constitute approximately 38% of the issued capital. $6.4 million to assist Kingsrose restructure Adaro has forecast similar production this year from its coal operations in Kalimantan. Adaro expects similar 2017 production