Documente Academic
Documente Profesional
Documente Cultură
December
2009 ~
TABLE OF CONTENTS
Page EXECUTIVE SUMMARY ............................................................ 1. 1.1. 1.2. 1.3. 2. 2.1. 2.2. 2.3. 2.4. 2.5. 2.6. 2.7. 2.8. 3. 4. 5. 5.1. 5.2. 6. 6.1. 6.2. 6.3. Financial Highlights ............................................................ Mission .................................................................................. Objective ............................................................................... Key Success Factor ............................................................... Project Summary ................................................................ Company Ownership ............................................................ Pit Location ........................................................................... Infrastructure and Hauling Road .......................................... Coal Reserves ....................................................................... M i n i n g .............................................................................. P r o d u c t i o n .................................................................... The Status and Issue on CCoW 1st Generation .................... R i s k s ................................................................................. Market Analysis Summary ................................................ Strategy and Implementation ............................................ Management Summary ...................................................... Personnel Plan ...................................................................... Organisation Chart of PT. Kendilo Coal Indonesia .............. Financial Plan ..................................................................... Investment Summary ............................................................ Fund Sourcing ....................................................................... Financial Projection .............................................................. 4 5 6 7 7 7 7 8 8 9 11 11 13 13 14 16 16 16 17 18 18 19 19 21
CONCLUSIONS .............................................................................
Page
Table 1 : Table 2 : Table 3 : Table 4 : Table 5 : Table 6 : Table 7 : Table 8 : Table 9 : Table 10 : Table 11 : Table 12 : Table 13 :
Projection of Net Profit After Tax ............................ Projection of Cashflows, Payback Period, NPV and IRR ............................................................................ Resources up to 140 meters Overburden .................. Raw Coal Quality (ADB) .......................................... ROM Coal and Washed Coal Product Quality ......... Annual Schedule of ROM Coal Production and Washed Coal .............................................................. Indonesia Coal Production ........................................ The big Five Coal Producers in Indonesia ................ Market and Indonesian Coal Production ................... Summary Capital Expenditures (Capex) .................. Fund Sourcing ........................................................... Low Case Scenario of Net Profit and Cashflows Projection .................................................................. High Case Scenario of Net Profit and Cashflows Projection ..................................................................
6 6 9 10 10 11 12 12 14 18 19 20 21
The big Five Coal Producers in Year 2008 .............. Import Thermal Coal Asia ........................................ Historical Average Selling Price ..............................
12 15 15
Executive Summary
PT. Kendilo Coal Indonesia (KCI) is a Foreign Investment Company, under the Indonesian Investment Laws known as Perusahaan Penanaman Modal Asing (PMA), established on 31 October 1981, whereas the majority share holder is currently being held by Kendilo Coal, LLC., of State of Delaware, USA. KCI holds Coal Contract of Work (CCoW) 1st Generation in Coal Mining with Ministry Mines, Energy and Mineral Resources, Republic of Indonesia, through Contract No. J2/Ji DU/46/81, with its validity from 02 November 1981 to 01 Mei 2024. The Coal Concession is located in Pasir Regency, East Kalimantan Province, and divided into two areas (Pit) known as Petangis Pit and Bindu Betitit Pit. The Petangis Pit, where it was initially mined on 02 Mei 1994, had already been completely exploited, rehabilitated, reclamated, and regevatated according to international standard for health, safety environment and community as set by HSEC BHP Biliton Group. Reclamation areas of the mined areas became Petangis Forest Park and it was already handed over to the Local Government on 12 September 2005. Later the status of CCoW is still in the Exploitation Phase with the issuance of Exploitation Mining Right issued by the Director General of Mines No 190.K/2014/DDJP/1995 with an area of 1,869 Ha on Bindu Betitit Pit with its validity from 1991 to 2021, whereas it has coal reserves to be exploited further. KCI will focus on its exploitation to the coal reserves of Bindu Betitit Pit according to Approved Competent Person Michael Friederich under JORC 2003 Compliance, whereas the estimated Coal Resources, with overbuden up to 100 meters (m), is 34 million Metric Ton (MT). With a Stripping Ratio (SR) of 1 : 7, it is estimated to produce Run Of Mine (ROM) of 27 million MT (23 MT Bindu + 4 MT Betitit). With the coal thickness of Bindu Betitit Pit ranges between 6 (six) to 9 (nine) meters (m), the Coal Resources up to 140 meters (m) overburden is estimated to be 46 million MT. And with up to 200 meters (m) overburden, it is estimated to be 61 million MT or there is an additional of 15 million MT as Coal Invetory technically possible to be mined but it needs to be further evaluated for its feasibility economically. The availability of detailed exploration data consisting data, uncomplicated planning map of geological structure certainly give support to the operational success in achieving highest productivity. Meanhile adding value in getting higher coal is required thru coal washing process. Opening up and constructing new hauling road of 15 km from Bindu Pit to ex PT. Indocoal Pratama Jaya (IPJ)s hauling road as an additional hauling road to the existing 14 km of ex IPJs hauling road to ex IPJs Jetty. Beside that, it is also required to build a bridge crossing Sungai Kendilo (river), constructing crushing and washing plant, and improvement of ex IPJs hauling road and ex IPJs Jetty. Another interesting thing in operating this Bindu Btitit Pit is the short time required to begin exploiting 2 million MT annually is the short hauling distance of less than 30 km, the Bindu Betitit Pit is relatively known and easy to be reached via over land. In the past recent years, there has been a sign of an increasing demand/consumption of thermal coal with high sulphur content as similar to KCIs coal specifications. Production planned of 1.5 million MT washed coal annually can easily be absorbed by cement or power 4
plants domestically or internationally, especially those who have already been equipped with Flue Gas Desulphurisation Units (FGD) unit. Also there many coal miners in East Kalimantan that are producing lower calorific value with lower sulphur content if blending is required. From the Financial Performance perspective, it is projected that by the end of 5th year, KCI will able able to finance its operations its self without depending upon any loan from 3rd party any longer.
1. Financial Highlights
This coal exploitation project of Bindu Betitit Pit is sensitive to technical risks and other economic external factors like selling price, operational costs especially fuel and foreign exchange. The following is financial projection based on several assumptions. Assumptions : Capital Expenditures Long Term Loan Short Term Loan US CPI (Inflation rate) Rate of Corporate tax Low Case Scenario : Raw Coal Production Washed Coal Production Wash Yield Selling Price FOB Vessel High Case Scenario : Raw Coal Production Washed Coal Production Processing yield (washed coal) Selling price FOB Vessel : : : : : : : : : : : : : USD 30,970,500.- . Interest 8 % pa. with 2 (two) years of grace period. USD 6,000,000.- with interest rate 8 % pa. For 2 (two) months working capital 2.5 % pa (Source : Research of EIU). 45 %. 2.08 million MT pa. 1.50 million MT pa. 72 %. USD 60.- / MT. 2.00 million MT pa. 1.50 million MT pa. 75 %. USD 62.- / MT.
From the calculated Net Profit and Cashflows Projections, the following is the illustration for mining period of 10 (ten) years that shows :
Low Case
1,236,518 5,801,709 10,798,383 11,220,431 11,642,059
High Case
2,014,157 7,368,178 13,148,506 13,570,985 13,993,053
Table 2 : Projection of Cashflows, Payback Period, NPV and IRR Amount : USD
Year Year - 1 Year - 2 Year - 3 Year - 4 Year - 5 Up to Year - 10 Total Cashflows Payback Period NPV (discount rate 8 % p.a.) IRR 138,207,231 3.1 year 43,434,048 41% 159,364,986 2.7 year 55,854,080 49% Low Case 5,345,331 9,910,522 14,907,196 15,329,244 15,750,872 High Case 6,122,970 11,476,991 17,257,319 17,679,797 18,101,865
From the 2 (two) Scenarios as described above, it is shown that on the end of Year 5, the Company is expected to run its operations using its own finance without depending on any 3rd party loan any longer. And if the selling price is higher than USD 62,- / MT and the processing yield (washed coal) is improved higher than 75 %, then the Companys cashflows is certainly even better.
1.1. M i s s i o n
Making this Company as a reputable and a respected mining company in mining business ethic and coal business in Indonesia, supporting economy thru Royalti payments, devisa for the Country thru export sales and opening up job opportunities as well as new supporting busines.
1.2. Objective
Implementing exploitation further on coal reserves of Bindu Betitit Pit, improving added value producing coal with higher calorific value thru coal washing processes, implementing a good reclamation and regevetation as required by local and central government.
2.
Project Summary
The status of CCoW is still in the Exploitation Phase with the issuance of the Exploitation Mining Rights issued by the Director General of Mine No. 190.K/2014/DDJP/1995 with an area of 1,869 Ha on Bindu Betitit Pit with its validity from 1991 to 2021. The exploitation of Petangis Pit ended on 12 September 2005 and with the new Managementon board, the Company intends to continue its coal exploitation on Bindu Betitit Pit that had previously been explored but not yet exploited. With Stripping Ratio (SR) of 1 : 7, it is estimated to be 27 million MT, whereas the coal resources for up to 100 meters (m) overburden is 34 million MT as shown by drilling exploration results according to JORC Compliant Resources with international reputation.
The development plan for hauling road and jetty proposed to be used for future exploitation of Bindu Betitit Pit coal reserves is as follows : Crushing and washing plant are to be located in Bindu Betitit Pit. Constructing new hauling road of 15 km as an access road to connect Bindu Betitit Pit to Pagar-1. Constructing bridge over Sungai Kendilo (river). Improvement of the existing ex IPJs hauling road 14 km from Pagar-1 to ex IPJs Jetty IPJ, Sungai Apar. Constructing supporting facilities and loading conveyor at ex IPJs Jetty, Sungai Apar. Permit to accross public road. 8
The Map of the proposed hauling road is illustrated by No. 2 in below picture :
1
2
- Kideco Coal Haul road from mine to Tanah Merah Load Port. - IPJ Coal Haul road from Pagar-1 to IPJ Apar Load Port (+14 km). - Ex-BHP Pemda Coal Haul road from Petangis to Pemda Load Port at Apar ( + 14 km)
2 3
- Public Road
With the coal thickness of Bindu Betitit Pit ranges between 6 (six) to 9 (nine) meters (m), the Coal Resources up to 140 meters (m) overburden is estimated to be 46 million MT. And with up to 200 meters (m) overburden is estimated to be 61 million MT or there is an additional of 15 million MT as Coal Invetory technically possible to be exploited but it needs to be further evaluated its feasibility economically. Outside the exploration areas that had been done, it is predicted that there is still additional of 2 million MT of coal reserves located in southern tip of Bindu Betitit Pit. From the exploration results, the average coal quality taken from the coal samples before washing process (as a Raw Coal) are as follows : Table 4 : RAW COAL QUALITY (ADB) Sample : Parting 0-30 cm included ADB Ash Calorific Value Inherent Moisture Total Moisture Volatile Matter Fixed Carbon Total Sulphur HGI AFT Range 24.2 31.8 % 4,567 5,912 kcal / kg 2.5 4.1 % 7 % (AR) 32.3 35.3 % 31.6 38.1 % 2.0 4.5 % 47 1,410 0C Average 28.2 % 5,465 kcal / kg 3.2 % 33.9 % 34.7 % 3.04 %
Ash content is mainly dominated by claystone bands. Washing process can easily wash ash automatically out from the coal and therefore it will improve the coal quality. With the washing yield of 72 %, it is expected to produced 19.440 million MT washed coal from 27 million MT ROM coal. The average coal quality after washed would be as follows : Table 5 : ROM COAL AND WASHED COAL PRODUCT QUALITY ADB Ash Calorific Value Inherent Moisture Total Moisture (AR) Volatile Matter Fixed Carbon Total Sulphur Wash Yield HGI AFT ROM Washed@12% Ash Washed@15% Ash 28.2 % 12 % 15 % 5,465 kcal / kg 6,600 kcal / kg 6,400 kcal / kg 3.2 % 2.65 % 2.65 % 7% 10 % 10 % 33.9 % 36 % 36 % 34.7 % 42 % 39 % 3.04 % 2.65 % 2.65 % 0 58 % 72 % 47 1,410 0C
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2.5. Mining
The Company will not do the mining works itself, but will appoint a reputable coal mining contractor. To manage efficient cost and avoiding out of control mining costs, the Company will have a work contract with a reputable national or international coal mining contractor like Pama Persada, Theiss, Petrosea or Buma with Production Management Supervision from the Companys Management that has a proven track record in the mining operations. The following is the Annual Mine Plan Schedule with washed coal production and ROM coal production at a Stripping Ratio (SR) of 1 : 7. Table 6 : Annual Schedule of ROM Coal and Washed Coal Production
MINE PLAN
REMARKS Mine Development Mine Development ) ) ) ) ) ) > Commercial ) Production ) ) ) ) ) Begin Mine Closure Begin Mine Closure
0,69 1.39 2.08 2.08 2.08 2.08 2.08 2.08 2.08 2.08 2.08 2.08
0.50 1.00 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50 1.50
Bindu Pit-A & Betitit Pit-E Bindu Pit-A & Betitit Pit-E Bindu Pit-A-B & Betitit Pit-E Bindu Pit-B & Betitit Pit-E Bindu Pit-B & Betitit Pit-E Bindu Pit-B & Betitit Pit-E Bindu Pit-B & Betitit Pit-E Bindu Pit-B-C & Betitit Pit-E Bindu Pit-C & Betitit Pit-E Bindu Pit-C & Betitit Pit-E Bindu Pit-C-D & Betitit Pit-E Bindu Pit-D & Betitit Pit-E
22.9
16.5
2.6. Production
The ROM coal production plan of Bindu Betitit Pit Coal Project is 2 million MT per year with washed coal production of 1.5 million MT for mining period of 12 (twelve) years. Annual installed feeding capacity of crushing plant is 2.8 ROM million MT and washing plant is 2.6 ROM million MT. (Based on DMP Washplant from Australia. Other producers from South Africa/India/China). Geographically, the biggest Indonesian coal producers are originated from East Kalimantan Province, South Kalimantan Province and South Sumatera Province. The following is the Indonesia Coal Production between 2005 2009 (in MT) :
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Table 7 : Indonesia Coal Production It is predicted that Indonesia Coal Production will decrease in tahun 2009 as a decreased coal demand or consumption due to a weaking global economy.
Source : www.dtwh2.esdm.go.id
Thus, the big 5 (five) coal producers in Indonesia are originated from Kalimantan, those are (MT) : Table 8 : The Big Five Coal Producers in Indonesia
Big 5 Coal Producer 1 2 3 4 5 6 PT. Adaro Indonesia PT. Kaltim Prima Coal PT. Kideco Jaya Agung PT. Arutmin Indonesia PT. Berau Coal Others Total 2007 36,037,866 38,454,558 18,889,931 15.394.067 11,811,494 58,202,840 178,790,756 % 20.2 21.5 10.6 8.6 6.6 32.6 100.0 2008 38,482,461 36,280,348 21,900,596 15,701,501 12,924,721 63,427,242 188,716,869 % 20.4 19.2 11.6 8.3 6.8 33.6 100.0
Source : www.dtwh2.esdm.go.id
Adaro
Adaro; 20,4%
KPC
Kideco
Kideco; 11,6% KPC; 19,2%
Arutmin
Berau coal
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2.8. R i s k s
The risks level is not really crucial as the Company is continuing its mining operations moving to the next location that is Bindu Betitit Pit after the previous Petangis Pit was closed, however there are few risks still need to be taken into considerations as follows : The biggest risk is the availability of financing for Capital Expenditures that will be used for opening up and constructing new hauling road, improving the existing hauling road, constructing crushing and washing plant, land acquisition for pit area and hauling road, constructing bridge across the river, constructing jetty/conveyor and obtaining other required licenses. Risks on mining services is minimised by having a coal mining contract with a reputable national/international coal mining contractor based on coal produced, not based on BCM.
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Risks on land acquisition used for pit area and hauling road especially issues with social cultural interaction with local people and land acquisition of palmoil plantation. Risks related to the future Government Regulations/Policies as consequences of the New Mining Law of 4/2009, new environmental impact standar, royalti, etc. other risks associated with local social cultural aspects. Risks on Taxes that are still imposed based CCoW against existing Tax Laws. Cashfolws Time gapping, regulations on Royalti versus VAT where the disputed amount is considerably high. Regulatory risks including the interpretations and the implementation of CCoW due to the related party is the Government of Indonesia and other external regulatory risks as a result of the global climate change. Country Risk of Indonesia in respect to investment climate.
Source : www.dtwh2.esdm.go.id
Thermal Coal demand in Asian region is dominated by Japan, Taiwan, Korea, China and India that get supplies mainly from Australia and Indonesia. For the past recent years, high coal calory with shulpur < 3.0 % has been saleable for export to India, Thailand and Philipine as well as it is now being accepted locally by big coal miners as blending item into their high calorific value coal product for export market. The following is Asian Thermal Coal imports between 2005 2008 and estimated 2009 (million MT) :
14
Million / Ton
Japan
Taiwan
S. Korea
China
India
Production and Sales estimation for 2009 will decrease due to the global ecenomic crisis. The following graphic shows the historical Selling Price (USD/MT) FOB Vessel from May 2008 to September 2009 for coal quality 6,300 6,100 kcal/kg (adb) and 6,700 up kcal/kg (adb) : Graphic 3 : Historical Average Selling Price
140 120 100 U SD /T on 80 60 40 20 0
08
08
09
09
09
08
08
08
09
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ct. 0
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n.
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.0
.0
.0
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09
ay
Ju
ay
pt
ar
Ju
Ja
Fe
No
De
Ap
Ju
Ju
p.
Se
#REF!
Note : 5800 kcal GAR = 6300 6100 kcal ADB 6500 kcal GAR = 6700 kcal up ADB Source: www.argusmedia.com ICI price index.
Targeted market is mainly for export designated to cement and power plants in countries like India, China, Korea, Taiwan, Philipines, etc. and local market as well. The challanges presently faced by the Company to market this coal are as follows :
15
No
Au
Au
Se
v.
09
Market is limited and relatively small for high sulphur coal due to limited usage of Flue Gas Desulphurisation (FDG) unit by cement and power plant. Global warming issues. High sulphur content, Sulphur 3.04 % (adb) RAW and 2.65 % (adb) after washed. Developing market actively of high sulphur coal to be consumed by cement and power plant domestically and internationally who has Flue Gas Desulphurisation (FGD) unit. Applying competitive selling price.
5. Management Summary
5.1. Personel Plan
Well trained and capable man power and personnels are the key success factor of the Companys operations. By having key people in the team, the new Management will continue the mining operations. This new Management of the Company is mixtures of professionals from different backgrounds and expert in their fields as decribed below : Has experience and expertise as the owner and the operator of CCoW also in East Kalimantan Province as well. Has more than 10 years of experience as High rank officers in a reputable national coal mining contractors. Has a background in accessing Financing from international financial institutions as well as financing for investment activities. 16
Experience and expertise in Risk Management and Cost Control Management. Has a good Marketing Network. Experience in conducting Initial Public Offerring (IPO) of a company going public, for for future Companys development.
Based on the Extra Ordinary Shareholders General Meeting as stated by Notarial Deed, Sutjipto, SH, M.Kn., No. 25, dated 04 September 2009, the Board of Commissioners and Board of Directors are as follows : President Commisioner Commisioner Commisioner President Director Vice President Director Director Director Director : : : : : : : : Ludi Prasetyo Hartono Ir. Agustinus Lomboan Kunal Saha A. Kunwibowo Mrs. Yocke Kaseger Iwan Pranoto Ir. Agus Sukoco Abang Akhmad Riza
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6. Financial Plan
6.1. Investment Summary
To continue the mining activities, the Company needs Long Term Loan as Investment Capital (Capital Expenditures, Capex) to finance the development of its infrastructures i.e. construction and improvement of hauling road, bridge, crushing and washing plant, supporting loading facilities, as described below : Table 10 : Summary of Capital Expenditures (Capex) Amount : USD
CAPITAL EXPENDITURES (CAPEX) No 1 2 Description Additional Drilling & Sampling Analysis - Surface Topography Studies & Permits - Feasibility Study and presentation at Jkt - Amdal Mining and presentation at Kabupaten - Amdal Port and presentation at Kabupaten - Port Design, Presentation and permits - Mine Plan Software
- Others (Wash ability, geotechnical, hydrology and regulars)
Total (USD) 500,000 75,000 50,000 50,000 30,000 50,000 50,000 100,000 2,500,000 2,250,000 2,400,000 700,000 1,200,000 2,000,000 250,000 250,000 1,000,000 1,700,000 9,500,000 1,500,000 1,500,000 500,000 28,155,000 1,407,750 1,407,750 30,970,500
3 4
Land Acquisition & PNBP Infrastructures : - New Haul road - Bridge at Kendilo River - Upgrade Apar Haul road - Upgrade Ports Apar (2 Jetty cap: 200k MT) - Build 2 lines New Load Conveyor (cap: @ 500 tph) - Upgrade Port Apar Stock pile - Hopper (cap: @ 500 tph) - Workshop, Office, Camp, Housing, Blast Magazine Processing Plants - Crushing Plant (cap: @400 tph) - Washing Plant (cap: @380 tph) - Installation & Construction Power Generators and Distribution System Supporting Equipments and tools Sub-total Project Management, Design and Commissioning Contingency Total :
6 7
8 9
LS LS
5% 5%
18
Total
36,970,500
Long Term Loan with a grace period of 2 (two) years are allocated for Capital Expenditures as follows : Additional drillings, sampling analisis and additional Surface Topography. Studies and permits for Port, Environment, Geotechnical and Hydrologi, Mining and Coal Washing Plant. Lands acquisition. Infrastructures i.e. opening up and construction of new hauling road 15 km, contruction of a bridge crossing Sungai Kendilo (river), improvement of ex IPJs hauling road of 14 km, improvement of supporting facilities of ex IPJs Jetty and construction of 2 (two) lines Loading Conveyor, workshop, site offices, base camp, housing and stock pile. Construction of crushing and washing plant. Procurement of power generators, distribution systems, and supporting equipment. Project management, design, comissioning and contingencies.
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Low Case Scenario : The following Cashflows and Net Profit Projection with assumptions as follows :
Capital Expenditures (Capex) of USD 30,970,500.-. Long Term Loan with interest rate of 8 % pa, with 2 (two) years grace period. Working Capital of USD 6 million, for 2 (two) months productions. ROM production volume of 2,083 million MT pa. Washed coal volume of 1,5 million MT pa. Processing yield (washed coal) of 72 %. Selling price FOB Vessel USD 60.- / MT. US CPI (Inflation rate) 2.5 % pa. Corporate Tax Rate of 45 %. Opening up and constructing new hauling road of 15 km. Constructing a 120 meter bridge crossing Sungai Kendilo. Improvement of 14 km ex IPJs hauling road and supporting facilities of ex IPJs Jetty. Constructing crushing and washing plant. Annual installed feeding capacity of crushing plant is 2.8 ROM million MT and washing plant is 2.6 ROM million MT. Table 12 : Low Case Scenario Projection of Net Profit and Cashflows
Amount : USD Year Processing Yield Sales USD/ton Year - 1 72% 60 Year - 2 72% 60 Year - 3 72% 60 Year - 4 72% 60 Year - 5 72% 60 Year - 6 72% 60 Year - 7 72% 60 Year - 8 72% 60 Year - 9 72% 60 Year - 10 72% 60 Total High Case Scenario :
Net Profit 1,236,518 5,801,709 10,798,383 11,220,431 11,642,059 12,063,211 12,043,886 12,024,086 14,263,628 14,242,819 105,336,730
9.51 9.50
7.80
Cashflows 5,345,331 9,910,522 14,907,196 15,329,244 15,750,872 16,172,023 16,152,699 16,132,898 14,263,628 14,242,819 138,207,232
The following Cashflows and Net Profit Projection with assumptions as follows :
Capital Expenditures (Capex) of USD 30,970,500.-. Long Term Loan with interest rate of 8 % pa, with 2(two) years grace period. Working Capital of USD 6 million, for 2 (two) months productions. ROM production volume of 2 million MT pa. Washed coal volume of 1.5 million MT pa.
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Processing yield (washed coal) of 75 %. Selling price FOB Vessel USD 62.- / MT. US CPI (Inflation rate) 2.5 % pa. Corporate Tax rate of 45 %. Opening up and constructing new hauling road of 15 km. Constructing a 120 meter bridge crossing Sungai Kendilo. Improvement of 14 km ex IPJs hauling road and supporting facilities of ex IPJs Jetty. Constructing crushing and washing plant. Annual installed feeding capacity of crushing plant is 2.8 ROM million MT and washing plant is 2.6 ROM million MT. Table 13 : High Case Scenario Projection of Net Profit and Cashflows
Amount : USD Year Processing Yield Sales USD/ton Year - 1 75% 62 Year - 2 75% 62 Year - 3 75% 62 Year - 4 75% 62 Year - 5 75% 62 Year - 6 75% 62 Year - 7 75% 62 Year - 8 75% 62 Year - 9 75% 62 Year - 10 75% 62 Total
Net Profit 2,014,157 7,368,178 13,148,506 13,570,985 13,993,053 14,414,656 14,395,795 14,376,469 16,616,498 16,596,188 126,494,485
11.08 11.06
9.37
Cashflows 6,122,970 11,476,991 17,257,319 17,679,797 18,101,865 18,523,469 18,504,608 18,485,282 16,616,498 16,596,188 159,364,987
Conclusions :
PT. Kendilo Coal Indonesia (KCI) was established on 31 October 1981 as a Foreign Investment Company, under the Indonesian Investment Law known as Perusahaan Penanaman Modal Asing (PMA), from State of Delaware, USA. KCI is a coal company holding Coal Contract of Work (CCoW) 1st Generation with Government of Indonesia thru Contract No. J2/Ji DU/46/81, valids from 02 November1981 to 01 May 2024. Later the status of CCoW is still in the Exploitation Phase with the issuance of Exploitation Mining Right issued by the Director General of Mines No 190.K/2014/DDJP/1995 with an area of 1,869 Ha on Bindu Betitit Pit with its validity from 1991 to 2021
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KCI will continue its mining activities of Bindu Betitit Pit with an area of 1,869 Ha located in Pasir Regency, East Kalimantan Province. The estimated coal resources is 46 million MT with up to 140 meters of overburden, with mining period of over 12 (twelve) years. It is a continuation of previous mining operations so that the mining preparations are not timely. Hauling road is less than 30 km. Washing plant is required to be constructed to give added value so that the washed coal quality becomes 6,400 kcal / kg and sulphur 2.65 %. Annual installed feeding capacity of crushing plant is 2.8 ROM million MT and washing plant is 2.6 ROM million MT. Capital Expenditures (Capex) totalling to USD 30,970,500.- is required as Long Term Loan with a grace period of 2 (two) years. Requirement of Working Capital USD 6 million, for 2 (two) months productions. All at 8 % p.a. interest rate. High case Scenario, with projected mining period of only for 10 (ten) years, processing yield of 75 %, washed coal produced is 1,5 million MT pa, selling price FOB Vessel of USD 62.- / MT, tax rate of 45 %, shows financial performance as follow : Net Profit after tax Cash flows Payback period Net Present Value (NPV) : : : : USD 126,494,486.-. USD 159,364,986.-. 2,7 years. USD 45,527,903.- (discount rate of 8 % pa).
Minimum risks as KCI is planning to continue its mining operations of Bindu Betitit Pit. The previous mining operations of Petangis Pit was already closed with a good reputation and recognition for its reclamation and revegetation. The average annual Indonesian Coal market for the past 5 (five) years is 124,6 million MT for export and is 41,5 million MT for domestic consumption. Thermal coal consumptions in Asian region are above 300 million MT pa as supplied by Australia and Indonesia with the average selling price of fob vessel fluctuated where is the highest was USD 125.- / MT in August 2008 the latest was USD 63.- / MT in November 2009. There has been a sign of increasing demand/consumption of thermal coal with high sulphur from cement and power plant, especially those who have Flue Gas Desulphurisation (FGD) unit. For the last 2 (two) years, high coal calory with shulpur < 3.0 % has been saleable for export to India, Thailand and Philipine as well as it is now being accepted locally by big coal producer as blending item into their high calory coal product for export market.
22
In achieving the Companys success, KCI is presently headed by new Management who has expertises and experiences in operating CCoW, coal mining operations in general, access to financing the Capital Expenditures (Capex) as well as Working Capital required, marketing network for domestic and export market and the experience in assisting Initial Public Offering (IPO), Go Public, for further Companys development.
Enclosures :
Income Statement Projection. Cashflows Projection. Cost of FOB Vessel. Jakarta, 28 December 2009.
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