Indonesian Coal Investment

RNS Number : 3168X

Stellar Resources PLC

09 January 2014

 



Stellar Resources plc

 ("Stellar Resources" or the "Company")

Indonesian Coal Investment.

Bengkulu Coal Project to commence operations

Stellar Resources (AIM: STG) announces that it has signed a Binding Term Sheet ("BTS") to acquire an initial 20% shareholding in Boletus Resources Limited ("Boletus"), which has signed commercial terms to immediately develop the high quality coal at the Bengkulu Coal Project on the Indonesian Island of Sumatra. Stellar has the right to incrementally increase its shareholding in Boletus up to 29%, but has no obligation to do so.

Boletus has today signed binding agreements with PT Bumi Arma Sentosa (BAS), the 100% owners of the Bengkulu Coal Project, that secures a joint Co-operation Agreement to mine develop, mine and export the coal with immediate effect. Boletus expects mining operations at Bengkulu to commence next month with first scheduled coal expected to be available for export through the nearby Bengkulu coal loading terminal early in Q2 2014.

David Lenigas, Stellar Resources Executive Chairman, commented:

"The Company will now be working closely with Boletus to bring the Bengkulu Coal Project into production by early Spring. The aim is to have final mine designs and production schedules completed over the next few weeks, where drilling has already identified 5 million tonnes of high quality open pittable export coal, with earth moving equipment expected to be operational at Bengkulu by the month's end. "

"The Company has approximately $4m cash at bank prior to this transaction and intends to pursue further investment opportunities in the resources sector."

About the Bengkulu Coal Project:

PT Bumi Arma Sentosa coal project ("Bengkulu Coal Project") is located in the Northern Bengkulu Regency of South West Sumatra Indonesia.

The Co-operation Agreement between Boletus and PT Bumi Arma Sentosa (BAS) covers a strategic 200 hectare concession on which 89 drill holes have already been drilled. This drilling has already established a measured and indicated resource (non JORC) of approximately 5,055,800 tonnes of open pittable high grade, low sulphur thermal coal. The average coal specifications of the drilled resource are summarised in Table 1. Given the higher quality, low sulphur content and the phosphorus content the potential for this coal is to penetrate the Stainless Steel production market which offers a premium price.

Current mine development plans for the Bengkulu Coal Project are to commence mining operations in February 2014 and gear up to an initial annual production rate of  350,000 tonnes of export quality coal for 2014. There is significant scope to increase production above 350,000 tonnes per annum after 2014 from the existing drill defined coal. Further seismic work and drilling designed to increase the measured and indicated resource further is also expected to commence in Q1 2014.

The Project's 6,500 kcal coal represents as some of the higher quality Thermal Coal available in Indonesia, and Boletus expects that it will be suitable for direct shipping to the existing Japanese and Chinese customers currently taking this type of coal from the district.

The mine is located 72 kilometres north of the coal loading terminal of Bengkulu in the village of Air Banai, which is accessed via a sealed asphalt road. There are already 8 existing coal operations in the area that currently supply the Bengkulu coal loading terminal.

Table 1: Bengkulu Coal Quality analysis

Inherent Moisture (%)	Ash (%)	Volatile Matter (%)	Fixed Carbon (%)	Total Sulphur (%)	Calorific Value (Cal/g)
8.35	7.49	41.41	42.95	0.90	6,501

Transaction details with Boletus Resources Limited:

Stellar will acquire an initial 20% shareholding in Boletus, a special purpose company for developing the Bengkulu Coal Project, by paying $400,000 towards the start-up costs of the Indonesian operations. Stellar has the right, but not the obligation, to acquire a further 5% of Boletus by funding another $500,000 and a further 4% of Boletus by funding another $400,000.

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Enquiries:

Stellar Resources plc David Lenigas, Executive Chairman Donald Strang, Finance Director	[phone]
Cairn Financial Advisers LLP James Caithie / Paul Trendell Public Relations: Square 1 Consulting Ltd David Bick/Mark Longson	[phone] [phone]

 

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