Shayne Heffernan has issued a strong buy on Straits Asia Resources SGX:SAR with a price target of $5 in 2012.
Straits Asia is an unique company with a simple business model – mining thermal coal for export to major power utilities in Asia.
In November 2006, Straits Asia was the first coal company to be listed in Singapore and remains in that unique status.
We own 2 producing mines, both in Indonesia: Sebuku mine on Sebuku Island in South East Kalimantan, and Jembayan mine near Samarinda in East Kalimantan.
Our small head office in Singapore oversees marketing, accounting and other group corporate activities. We have a technical and administrative support office for our mines in Balikpapan and an Indonesian head office in Jakarta that handles, central government relations, tax and legal matters.
Straits Asia Group has a culture that demands us to maintain international standards and professionalism at all levels of business. We fully recognize our obligations to local communities where we mine and to the environment, demonstrated by awards we have received from country Presidents for bringing work and benefits to communities and for environmental rehabilitation.
Straits Asia Resources Limited (“Straits Asia”, SGX: SAR) is announced today that the Minister of Forestry has issued the Principle Licence (Izin Prinsip)
for the Northern Leases at Sebuku.
The Izin Prinsip is the precursor to the Izin Pinjam Pakai (Borrow and Use Licence) and its main purpose is to confirm rights to conduct extraction of coal provided certain final conditions are met. The Izin Prinsip sets out the conditions and, once they are fulfilled, mining and exploration may commence in the permitted area.
The Northern Leases are a key part of Straits Asia’s long-term strategy for mining its concessions at Sebuku. The area lies immediately to the North of the mine’s Tanah Putih pit and the same coal seams are continuous into the Northern Leases.
Straits Asia already holds a general body of information about the coal and geology in the Northern Leases and expects to commence work in the Northern Leases relatively quickly after the Borrow and Use Licence is issued, which will lead to the long-awaited ramp up of production from Sebuku mine.
Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.