Mar 17, 2011

Kangaroo secures 300,000 tons contract

Australia-listed coal producer Kangaroo Resources Limited (KRL) has secured a new coal sales contract with its strategic alliance partner PT Bayan Resources Tbk (BYAN), owned by conglomerates Dato' Low Tuck Kwong and Jenny Quantero, for coal sales from its 100%-owned Mamahak Coking Coal Project in East Kalimantan throughout 2011.
In a press statement today, the contract, for coal sales of up to 300,000 tons at a market pricem FoB Mamahak jetty, reflects the benefits of KRL's recently announced strategic partnership with Bayan to acquire Pakar Coal Project as Bayan is able to overcome operational and logistical issues to collect coal at the jetty.
KRL and Bayan are currently completing due diligence on this transaction and both parties remain confident on the closure of this transaction.
Operations are continuing to ramp up at Mamahak with total sales of 9,882 tons and 20,995 tons reported for the months of December 2010 and January 2011 respectively.
This contract provides KRL with a number of key advantages:
Firstly, KRL has contracted sales of coal at a price that will ensure a healthy operating margin moving forward, providing certainty in terms of revenue and cash flow.
Secondly, KRL receives a cash payment for the majority of the contracted sales price of coal.
Thirdly, Mamahak operational management team will be fully supported by Bayan, which has coal production of over 12 million tons in 2010.
KRL has recently acquired 10 new trucks and other equipment required to expand the existing operation at Mamahak.

Disclosure: No position at the stock mentioned above.

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