Geo Energy has contracted China Communications Construction Company to build the road and jetty in Indonesia for US$150 million.
Under terms of the contract, Geo is paying US$21 million first, with the remainder to be paid progressively over the next 2 years.
Upon completion, the road will help Geo Energy increase the output of its mine by 25 million metric tonnes in 1HFY2026 and to 50 million metric tonnes in 2028.
Also, Geo Energy will be generating revenue by leasing out 25 million metric tonnes in hauling capacity to other coal miners at a rate of US$10 per metric tonne, potentially exceeding US$200 million per annum eventually, estimates Chew.
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Meanwhile, worldwide demand for coal is seen to be supported by emerging markets such as China, India and other parts of southeast Asia at a CAGR of 2%.
Chew values Geo Energy using a discounted cash flow method, with a 70% discount on the assets assumed for now as the road is still under construction.
Geo Energy shares closed at 32 cents on April 1, down 3.03%.
