Geo Energy Resources has signed an offtake agreement with commodities trader Trafigura where the latter will buy the entire production volume of the former's mine at Harfa of some 1.5 million tonnes per year.
Under terms of the agreement, Trafigura will provide between US$50 and US$100 million in prepayment to help ramp up the production.
Also, Geo Energy will be spending an initial capex of US$60 million to hire a mining contractor for 15 years to dig up the coal at the same Harfa mine, estimated to have reserves of between 15 and 20 million tonnes.
East Wonders Indonesia, as this contractor is called, is backed by China's Shanxi Yulong Group.
"The long-term partnership with Trafigura brings not only commercial strength but also strategic alignment, industry expertise, and access to global networks," says Charles Antonny Melati, executive chairman and CEO of the company.
"Together with EWI, the group is well positioned for sustainable growth and enhanced stakeholder value over the long term," he adds.
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Geo Energy Resources shares closed at 59 cents, up 2.61% for the day, extending a gain of 37.21% year to date.
