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Friday, 20 August 10
OVERSEAS AND GENERAL SUBSIDIARY INKS US$52M JONGKANG COAL SALES CONTRACT - PROACTIVE INVESTORS


Proactive Investors reported that, overseas and General (ASX: OGL) has reported that its Indonesian majority owned subsidiary, PT OGL Indotrade, has entered into a binding offer for the sale of its premium quality Jongkang coal with a Chinese power utility.

This is a final step prior to executing a sales contract for the supply of 50,000 tonnes per month commencing September 2010 at an FOB vessel price of U$80 per tonne for 6,300 cal/kg GCV coal.

Jack Tan, chairman, said the coal sales will provide OGL Indotrade with a revenue stream of $52 million per annum and has the capacity to transform OGL into a successful coal player.

Bonuses and penalties exist for any variation of coal quality. Following the successful delivery of a 40,000 tonne trial cargo, the contract will have a 12-month term.

The Jongkang Coal Mine is located near Tenggarong in East Kalimantan, Indonesia. The lease is a 94-hectare IUP Exploitation with all permits in order for immediate mine operations.

Jongkang’s 25,000 tonnes per month product will be complemented by the purchase of coal from a neighbouring supplier, to allow the company to sell 50,000 tonnes per month from September 2010.

The resultant operation will provide the company with revenues of U$4.0 million per month or U$52 million per annum.

Jongkang coal is a premium product with adb GCV 6950 cal/g, 2% ash and 0.7% sulphur. It will be blended down to GCV 6300 to meet the required Chinese specifications, commanding a strong sales price.

OGL's joint venture arrangement in Indonesia is with Malaysian owned group, Golden Focus Group Limited (Hong Kong) and their Indonesian entity, PT Indotrade Resources, which is a successful coal miner in Indonesia producing around 2mtpa of export grade steaming coal from East Kalimantan to China and Korea.

PT OGL Indotrade Resources has rights to mine and sell coal from the Rahmat, Jongkang, Pagar and Jambi coal tenements.

OGL aims to become a medium sized producer of metallurgical and steaming coal in Australia and Indonesia, both major coal producing nations.
Source: Proactive Investors



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