APAC Coal has an investment in Hudson, which is incorporated in Singapore as a private limited company, in the form of a convertible loan for $A2.5 million, with the first six-monthly payment due on October 31.
To facilitate the compensation process, construction of the mining access road and the pit opening, APAC Coal then agreed to commit to a further investment of $350,000 to enable the project to meet its maiden production timeline by the third quarter.
But due to the unforeseen technical issues at the Aie Dingin iron ore mine, APAC agreed to grant a three-month extension for the interest repayment to January 31, 2012.
APAC decided to make the convertible loan investments in Hudson to derive constant revenue stream from the interest payments and at the same time, be able to participate in a high-potential concession via the conversion option.
It claims it has a 30-year concession to explore for coal over a 23,124-hectare parcel of land in East Kalimantan, Indonesia.
It said a JORC-compliant inferred resource of 18.2 million tonnes had been identified, which was expected to form the basis of an initial mining operation.
The resource occurs within a very small area of the concession (3.8%), with over 90% of the concession yet to be explored to any significant degree.
Kalimantan is the principal coal producing region of Indonesia and the world’s seventh-largest coal producer.
APAC Coal is a subsidiary of Singapore-listed Magnus Energy Group, which operates in the upstream petroleum and coal industry.
Its core focus is petroleum, coal production, low-risk exploration and field development.
Magnus committed to providing a low-cost management and finance team in the initial phase of the development of APAC Coal.