Geo Energy Makes Strategic Entry into High-Value Coking Coal Market; Signs Binding Term Sheet to Acquire Majority Stake in Concession Holder with Indicative 2P Reserves of 20 - 25 Million Tonnes of Hard Coking Coal
Key highlights:
• Secures entry into premium hard coking coal market, a highly sought resource that commands a significant global price premium.
• The proposed acquisition of 50.61% of PT Mutiara Hitam Sukses (“MHS”), which wholly-owns PT Harfa Taruna Mandiri (“HTM” or “Target Company”), is value-accretive with minimal upfront commitment and transformational as it diversifies the Group’s asset portfolio and revenue stream from thermal to coking coal. The transformation will have significant positive long-term impact to the Group’s financial performance, similar to the Group’s Integrated Infrastructure.
• Based on recent market prices, the Target Company’s coking coal will be able to achieve a selling price of approximately US$220–US$250 per tonne.
• With an estimated annual production of 2 million tonnes and a cash cost of approximately US$110 per tonne, the Target Company could generate cash profits of US$110–US$140 per tonne, translating to potential annual cash profits of US$220 million-US$280 million for the Group.
• Geo Energy will have a First Right of Refusal to acquire the remaining shares of MHS in the event that existing shareholders choose to divest.
• Further advancing Geo Energy’s growth trajectory into a billion-dollar integrated energy group and beyond.
This milestone reinforces their trajectory toward becoming a billion-dollar integrated energy group. By securing a majority interest in this specialty coal segment, we are strengthening our resource base and positioning the Group for sustainable, long-term value creation.