Geo Energy signs coal offtake MoU with Trafigura

The non-binding deal includes a potential $64.1m to $128.1m prepayment.

Geo Energy Resources has signed two non-binding memoranda of understanding related to its potential acquisition of high-value coking coal in Central Kalimantan.

Under the first MoU, Trafigura intends to offtake and market 100% of export volumes from PT Harfa Taruna Mandiri’s coal, estimated at around 1.5 million tonnes per year.

Trafigura is expected to provide Geo Energy with a $64.1m (US$50m) to $128.1m (US$100m) offtake prepayment, subject to definitive agreements. The funds will support Harfa’s ramp-up and operations and strengthen the group’s cash position.

Harfa coal is expected to be sold at hard premium coking coal market prices, less an offtake or marketing fee.

Geo Energy also signed an MOU with PT East Wonders Indonesia, an underground mining contractor backed by Shanxi Yulong Group.

Under the agreement, EWI will provide underground mining services for Harfa for 15 years, including potential funding of certain capital expenditures and operating costs.

The MOU involves an initial capex of $76.9m (US$60m) to set up underground mining until first production.

Based on a preliminary feasibility study and analysis, EWI is confident of estimated reserves of 15 million to 20 million tonnes of premium hard coking coal.

Geo Energy said the potential acquisition and partnerships would support its expansion into the premium hard coking coal market, diversify its portfolio, and strengthen its appeal to institutional investors.

($1 = US$0.78)

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