Indika acquires Multi Tambangjaya

PT Indika Energy Tbk (INDY) announced that wholly-owned subsidiaries have signed a conditional sale and purchase agreements to acquire, together with a co-venturer, 100% stake of PT Multi Tambangjaya Utama (MTU) as well as its coal distribution rights for a combined indicative purchase price of approximately US$132 million.

Indika bought the assets, excluding the MTU's outstanding debt, via its subsidiaries dubbed PT Indika Indonesia Resources and Indika Capital Pte Ltd. Upon closing, Indika Resources and Indika Capital will hold a majority stake of 85% in this venture.

“This acquisition will increase Indika Energy’s coal reserves & resources and future production, and more importantly is in line with our strategy to strengthen further the group’s energy value chain,“ said Arsjad Rasjid, Co-CEO Indika Energy in a press statement.

MTU is a bituminous thermal coal (6,500 to 7,200 Kcal/kg adb) and coking coal (7,800 kcal/kg adb) mining company based in Central Kalimantan holding a CCOW third generation expiring in 2039 covering approximately 24,970 hectares concession.

Independent party analysis of the coal deposit on 10 blocks, based on USGS standard, indicates 75.2 million tons resource and 40.6 million tons  mineable reserve of high quality thermal and coking coal. Further plans for comprehensive drilling and detailed exploration of the concession area are in place to reconfirm the reserve base.

Who is Multi Tambangjaya?

Founded in 1989, Multi Tambangjaya is based in Jakarta and has a project area in Central Kalimantan, Indonesia. MTU has established in situ resources of bituminous coal and a track record of exploration success in the Barito basins. MTU has been awarded a concession of nearly 25,000 hectares by the government of the Republic of Indonesia.

MTU was acquired in 2007 by Asia Thai Mining, a global company operating in coal business through Asia. Since then, MTU has rapidly grown to become a recognized coal producer, its maximum capacity will reach 4.8 million tons per year at its final stage; mainly steam coal.

MTU became a fully fledged mining company by acquiring underdeveloped properties in established basins and has improved its logistic by building its own road and port. MTU believes that its demonstrated operational and technical expertise, combined with its excellent reputation and strong community relationships throughout Indonesia, make it well positioned to continue to grow its reserves and production.

As at May 31, 2010, MTU had 300 employees, whom mostly were Indonesian. MTU creates employment and business opportunities for local people, particularly in remote locations where there are few other opportunities for economic development, and ensures that skills, know-how and technology are transferred to Indonesian nationals.

MTU production has been delegated to our local contractor PT Thailand Bara Pratama, a subsidiary of Italian-Thai development PCL (ITD).
ITD is a global leading company fully supporting MTU through Asia Thai Mining Ltd. Strong of more than 30 years of experience in the mining industry and 50 years the construction business.
In 2000 ITD was awarded the 38 million tons coal mining project by the Electrical Generating Authority of Thailand (EGAT) for the Mae Moh Lignite Mine Phase 5 in Thailand. This was followed in 2002 with a 10 years contract for overburden removal and coal extraction

Disclosure: No position at the stock mentioned above.

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