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  • Jatenergy Gains Chapmans Ltd Investment To Up Indonesian Coal Output 0 comments
    Nov 19, 2013 1:14 AM

    Jatenergy (ASX:JAT) will gain an investment from Chapmans Limited (ASX:CHP) that will boost production at its Indonesian coal projects.

    An initial investment of $200,000 will be made directly into the Jongkang project for 50% profit share with Jatenergy.

    Investment company Chapmans has the option to invest a further $850,000 into Geronggang project, or Blackrock Energy, which houses the Barata projects.

    Indonesian coal

    Jatenergy owns the rights to five coal development projects in Kalimantan, Indonesia.

    Nearly 80% of production is rated as being sub‐bituminous, having a niche position in domestic and international markets because of strong demand for environmentally friendly, low ash, sulphur and nitrogen thermal coal.

    Increased Production

    The investment will enable the Jongkang project to be transitioned into a higher production mine facility with a monthly production target of 20,000 tonnes per month.

    If Chapman's elects to invest the further $850,000, Jatenergy will establish a mine site at Geronggang which will take around 2‐3 months to bring into production.

    The company aims to operate Geronggang at 20,000 tonnes per month and both mines will be producing coal for domestic and export use. Jatenergy will also review Sebuku for potential mine opening and exploitation.

    Jongkang Project Overview

    The Jongkang I and Jongkang II projects are currently in production and produced around 35,000 tonnes over the past year and were developed in December 2011 as part of a Joint Venture arrangement with a local Indonesian partner.

    Located in East Kalimantan approximately 5 kilometres along an existing haul road from the Mahakam River, and about 25 kilometres from a major hub of Indonesia's coal industry at Samarinda, each concession is covered by a production license comprising 100 hectares.

    Transport infrastructure is capable of handling more than 20,000 tonnes coal per month, subject to weather conditions. Upon the receipt of the investment from Chapmans, Jatenergy will move to operate the Jongkang project at increased capacity.

    Chairman Tony Crimmins stated, "Jatenergy will be able to utilise this investment to significantly increase production at Jongkang and also move the Geronggang project into production.

    "The company also plans to use some of the cash flow generated from these projects to plan the mining on Sebuku Island. This will change the nature of the play from short term to medium continuous production."

    Analysis

    For Jatenergy, the third party investment allays risk while boosting short term coal production and bringing forward cash flows.

    In addition, Jatenergy is due to receive $1.8 million by 17th of December, 2013 from the sale of the Coal Soil Brik project.

    The company is fast shaping as an Asian energy play, leveraged to newsflow given extremely light market cap. of $2 million.

    Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.

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