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Geo Energy returns to profitability

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World Coal,

Indonesian coal company Geo Energy has returned to profitability in 2Q16 on the back of a 191% increase in revenue on the same period in 2015. Cash profit on coal sales increased to US$4.5 per tonne with coal sales standing at 0.85 million t.

Net profit for the quarter stood at US$2.6 million compared to a net loss of 5.9 million t in 2Q15. Revenue for the quarter was US$21.4 million, compared to US$7.4 million the year before.

That took the company to a small profit of US$50 000 for the first six months of the year compared to a loss of US$9.6 million in 1H15. Revenue for the fist half of the year stood at US$33.3 million – a 231% increase on the year before.

“Our group is pleased to turn around our financial performance and register a net profit […] after two years of consecutive losses,” said Geo Energy CEO, Tung Kom Hon.

The company is also positive for the remainder of the year, targeting coal production of 0.6 million tpm to the year-end and then 10 million tpy in 2017.

The company’s production outlook has been boosted by the acquisition of PT Tanah Bumbu Resources (TBR) in July and the signing of a long-term coal supply contract with Engelhart Commodities Trading Partners (ECTP) of Singapore.

The supply contract with ECTP included an advance payment of US$20 million to develop the SDJ mine and will see Geo Energy supply 42 million t of coal through to 2022. Meanwhile, the acquisition of TBR brought with it an additional 44.4 million t of coal reserves located next to the SDJ operations.

“This proposed acquisition contains many significant synergistic advantages and would not only replenish our coal reserves but also potentially double our revenue,” said Tung Kom Hon “We are now in the process of discussing on a life-of-mine contract and prepayment on the TBR mine to off-take its coal and fund its development. The value of the TBR’s LOM contract is expected to be not less than the US$1.2 billion LOM contract signed on the SDJ.”

Geo Energy also noted promising signs of an uptick in prices for its 4200 GAR coal. The price index increased from US$26.60 per tonne in January to US$30.71 per tonne in early August. A continued increase in international coal prices would boost the company’s profit margins on coal sales further, the company said.

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