Straits Asia profits up 7% on impressive Jembayan results

Better results in 2010 seen following Jembayan's 30% production increase and coal markets recovery.

Straits Asia Resources Limited announced on Wednesday a 7% increase in full-year net profit to US$133.5 million for FY2009.

Jembayan mine led the boost in results, reaching 6.5Mt production, a 30% increase over FY2008. Steady support from the Sebuku mine and prudent management of coal trading opportunities over and above the coal produced from both mines, in order to open new markets, all contributed to the record net profit.

Strong Balance Sheet

Straits Asia’s consolidated balance sheet showed the Group had US$56 million in cash and US$207 million of bank debt. The balance sheet was bolstered further by the closing and drawdown of a new, 5 year US$350 million, Senior Debt Facility that was announced on 29 January 2010. As a consequence Straits Asia enters 2010 in a very strong financial position.

Dividend

A final tax exempt cash dividend of 2.03 US cents per share is recommended for payment on 21 May 2010, taking the payout for 2009 to 7.16 US cents (up from 6.83 US cents for 2008), exactly in line with the Straits Asia's 60% net profit dividend payout policy.

Coal

Jembayan's record production and sales figures were achieved against the backdrop of a decisive recovery from the load-out problems that occurred in October 2009 and the effective implementation of practical supply-chain solutions. As part of management's response initiative to this situation, Straits Asia is working on ways to improve the total infrastructure capacity of the mine and deliver loading efficiencies and cost savings with the potential to handle higher production volumes. Sebuku's production of 2 million tonnes in 2009 was in line with the Group's expectations.

Unit costs averaged US$42.9 per tonne at Jembayan and $33.7 per tonne at Sebuku in FY09. Whilst both these numbers are higher than the FY08 figures, they were in line with Straits Asia’s targets and represent a positive achievement given the restricted production potential at Sebuku (pending the issue of the boundary approval) and also given the load-out incident at Jembayan that disrupted the last quarter of operations.

Straits Asia also purchased 931K tonnes of coal from third parties in 2009, taking advantage of favourable and unusual market conditions. This is, however, not an activity that the Group intends to actively pursue as a strategy in the future.

Marine and infrastructure

As previously announced and reported, the Group's marine and infrastructure division (PTIS) was sold on 31 December 2009.

Other

Significant exploration work continued at Jembayan and Sebuku throughout 2009. Final analysis of the results of the programme is now underway and the Group expects to announce an updated, full JORC Resource and Reserve Statement in due course.

Outlook

Coal markets have gradually recovered from a generally weak period of demand growth influenced by cycles of de-stocking and re-stocking in 2009. Straits Asia has used the experience of the past year to lock in new contracts with reliable end users that will ensure that its targeted production increases over the next few years will have ready buyers. The recent increase in coal prices will benefit the Group's average selling prices for 2010 and, with its solid balance sheet and strong assets, the Group is looking confidently at 2010.