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Straits chief executive Milan Jerkovic told MiningNews.net the money would be used for project expansion and development along with trying to maintain the company’s working capital base of $A20-30 million over the next 12 months.
“We intend to engage in our next stage of production expansion and resource reserve increases staying relatively ungeared,” Jerkovic said.
Straits is currently considering an upgrade of its Sebuku coal project in Indonesia with the aim of increasing production to 6 million tonnes per annum by 2009.
“We probably don’t need any money for the expansion at Sebuku initially because that’s internal cash flow generated and we’ve done most of the preliminary work to the point where we’ll sell 3.5Mt of coal this year,” Jerkovic said.
“The pre-stripping that’s been done over the last six months, and a bit more in the next few months, will see us probably stabilise at a 4Mt sales target by the end of next year.
“We will then obviously [be] on the back of the ongoing resource-reserve exploration program – we’ll probably initiate a more detailed study sometime towards the end of this year looking to increase production again probably up to 6Mt if the resource can convert to reserves at that level.”
Jerkovic said Straits would progressively ramp up production in order to maintain the price it achieves for production from Sebuku.
“You don’t want to hit the market with too much of your coal at the one time because then there’s an overhang in pricing, so we’ll probably introduce it to the market over the next two years,” Jerkovic said.
Shares in Straits were off 10c (2.24%) at $4.37 in morning trade.
