West Perth-based Straits Resources Ltd subsidiary, Straits Asia Resources Ltd, has posted a 264 per cent jump in net profit for the first half of 2008.
West Perth-based Straits Resources Ltd subsidiary, Straits Asia Resources Ltd, has posted a 264 per cent jump in net profit for the first half of 2008.
The company reported a net profit of $US56.4 million, achieved on the back of a 91 per cent rise in revenue of $265 million and a record production of 4.46 million tonnes.
"Q2 2008 s average selling price of $US76.75 per tonne also shows that the rising trend for
global coal prices that began in early 2007 is now benefiting Straits' realised prices," Straits Asia said.
"The main reason why it has taken until 2008 for the Group s average selling price to start showing a significant increase is because its contracts are typically priced up to 12 months in advance of delivery.
"For 2008, the average selling price remains at $US70.50 based on 9Mt sales.
"For 2009 Straits has currently priced 2.6 million tonnes at an average price of $US82 per tonne,
including approximately 1.3 million tonnes of volume sold at prices in excess of $110 per tonne.
"Contracts for Sebuku coal have been made at up to $US135 per tonne and up to $US112 per
tonne for Jembayan coal (the lower grade coal from Jembayan mine), for 2008/9 deliveries."
Straits Resources holds a 47.1 per cent interest in Straits Asia.
Below is the full announcement:
Mainboard-listed Straits Asia Resources Limited ( Straits Asia , SGX: SAR) today reported that its net profit increased 264% to US$56.4 million for the six months ended 30 June 2008 ( 1H 2008 ). This was achieved on the back of a 91% rise in Group revenue to $265 million and record production of 4.46 million tonnes, which keeps the Group well on target to achieve production of not less than 9 million tonnes of coal for FY2008. The strong improvement in the production and financial performance of the operations endorses the growth strategy embarked upon by SAR.
Operations
In Q2 2008 alone, the Group produced a total of 2.3 million tonnes of coal (Q2 2007: 0.623 million tonnes) giving a 1H 2008 production that is about one-half of 2008 s total target. 2H is traditionally the stronger half of the year because of better weather. Jembayan continues to impress with its strong performance whilst Sebuku increased production significantly over the corresponding period in 2007.
Q2 2008 s average selling price of US$76.75 per tonne also shows that the rising trend for global coal prices that began in early 2007 is now benefiting SAR s realised prices. The main reason why it has taken until 2008 for the Group s average selling price to start showing a significant increase is because its contracts are typically priced up to 12 months in advance of delivery. For 2008, the average selling price remains at US$70.50 based on 9Mt sales.
For 2009 SAR has currently priced 2.6 million tonnes at an average price of US$82 per tonne, including approximately 1.3 million tonnes of volume sold at prices in excess of $110 per tonne. Contracts for Sebuku coal have been made at up to US$135 per tonne and up to US$112 per tonne for Jembayan coal (the lower grade coal from Jembayan mine), for 2008/9 deliveries.
The capacity upgrade at Jembayan to 11 mtpa is on schedule for 2009 completion, while Sebuku s new washplant and related infrastructure, which will increase capacity at Sebuku from 4mtpa to 8mtpa, is on schedule for commissioning by the end of this year.
Exploration
Straits Asia s exciting exploration programmes are all moving ahead. On 5 August 2008, Straits Asia announced a substantial upgrade in the Jembayan reserve from 37Mt to 92Mt, which was based only on the early stages of that mine's exploration programme. Drilling and exploration is continuing at Jembayan.
Drilling at Sebuku has been focused on defining resources in the Western Leases and also below the historically mined Kanibungan pit; Straits Asia expects to make results of this work known in due course. Drilling at the new Laung project has located a coal seam with high calorific value coal.
Shareholder Restructure
Straits Resources Limited ( SRL ) is expected shortly to lodge a prospectus for the in-specie distribution of its 47.1% shareholding in Straits Asia to SRL shareholders. Straits Asia itself expects to post its circular to shareholders concerning the Restructure and related matters and to lodge its information memorandum for secondary listing on the ASX soon. The whole exercise is expected to be completed by October 2008.
Chief Executive Officer s Comments
Mr Richard Ong Chui Chat, Chief Executive Officer, said: Our record results clearly show that our work and strategies have started to bear fruit. Straits Asia is well set to benefit from the higher prices we are now achieving for new sales and our production capacity increases. We have already begun to advance our plans for the new assets that we hope to acquire later this year in Madagascar and Brunei. When these assets are added to our project pipeline longside Laung and our two producing mines, the medium and long term outlook for Straits Asia will look even more exciting.
For the remainder of 2008, we will keep our focus on achieving our key production target as well as advancing acquisition opportunities so as to achieve our core aim of creating long-term shareholder value.
