PT Darma Henwa Tbk (DEWA), coal contractor and affiliated of PT Bumi Resources Tbk (BUMI), today jumped 8.96% to Rp73 per share from yesterday's closing level at Rp67.
Any new information from Darma Henwa? Is it a market speculation that Dewa could be one of shares swap option to settle US$600 million debt to China Investment Corporation?
Daren Morris, one of Vallar Plc founders, in an email to Insider Stories, said Darma Henwa is a partner for Kaltim Prima Coal, Arutmin Indonesia, and Berau Coal (small volume currently) and is part of the expansion strategy to increase coal production volume.
"Current volume is lower than you indicated and plans are in place to increase. Management is confident that Darma Henwa can handle current volumes and will work with Darma Henwa on expansion," he said.
Darma Henwa said they have sufficient and personnel to grow. Based on Vallar prospectus, Darma Henwa is a contractor to mine at Bengalon operated by KPC and Mulia and Asam-Asam mines operated by Arutmin. Bumi Resources acquired 44% stake in Dewa in December 2008. But, the effective interest was diluted to 28.8% as Zurich Assets, through which Bumi Resources holds Dewa, did not participate in Dewa rights issue in the first quarter of 2010.
Dewa owns and operates a range of equipment for mine exavation, mine hauling, and mine support with approximately over 210 units. As of December 31 2010, Dewa employed about 1,635 employees in its operations.
Darma Henwa produced 6 million tons, 6 million tons, and 6.6 million tons of coal in 2008, 2009, and 2010 respectively. The figures represent 11.3% and 9.5% respectively of total coal production of KPC and Arutmin Indonesia in those periods.
Dewa has historically managed a production rate of slightly below only a 6 million tons per annum. KPC is well aware of the current production limitations of Dewa and is evaluating its options with respect to ensuring that the production levels from Bengalon meet the current targets.
With current production of 6 million tons, how Dewa to meet the target of 13 million tons over the next 5 years without a capital injection?
Disclosure: No position at the stock mentioned above.
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