White Energy’s Business Development Activities
The underlying terms of White Energy’s first commercial joint venture with PT Bayan Resources were significantly improved. The parties agreed to increase the size and scope of the project from an annual output of 3 million tonne of upgraded coal to 5 million tonne and Bayan’s annual off take obligation of upgraded coal was increased from 500,000 tonne to 1.5 million tonne. The five year commitment equates to an annual off take obligation on Bayan of approximately US$ 215 million (after allowing for the rolling commissioning of each 1 million tonne module over the period). Implementation work on the plant commenced and significant progress made in a number of areas. The Bayan Resources Group is the eighth largest coal miner in Indonesia. Bayan through its affiliates has the right to mine and operate various coal mines in east Kalimantan. Bayan and White Energy intend to exploit the CSIRO developed patented briquetting process which White’s has licensed exclusively on a worldwide basis utilizing coal from Bayan’s deposits.
The Company entered into its second major joint venture transaction with the Adaro Group, one of Indonesia’s largest coal companies, and Itochu Corporation (Itochu), a major Japanese trading house. Under the joint venture agreement, the Company will design, build and operate coal upgrading plants at Adaro’s coal mines in East Kalimantan. Financial and technical feasibility studies have nearly been completed with the aim to build a 1 million tonne per annum coal upgrading plant with the intention to increase that output to 8 million tonne per annum.
White Energy is also looking at opportunities with Datang International Power Company Ltd, one of China’s largest utility companies, to build coal upgrading plants at its sub-bituminous coal mine in Inner Mongolia, China. The proposed joint venture to build a 1 million tonne per annum plant with a 10 million tonne per annum scale up intention is currently in the feasibility stage.
BHP Billiton agreed to provide a US$35 million, 7 year unsecured convertible funding facility to accelerate our coal upgrading technology roll-out. As part of the agreement BHP Billiton will act as White Energy’s exclusive global marketing agent for its upgraded export coal product and work together to apply our technology to certain of its sub-bituminous coal deposits. The agreement is a win from both a development perspective and also in having access to their expertise and global reach in the marketing of our upgraded coal.
White Energy is now actively targeting potential partnering opportunities in the US market where substantial deposits of sub-bituminous coal exist and tremendous opportunities to deploy the White Coal Technology. Major users are US power utilities who have switched from local bituminous coals to avoid the need for costly flue gas desulphurization plants. White Energy has tested coal from four mines located in the Powder River Basin with excellent results. The Company has also initiated a Level 1 American Depositary Receipt (ADR) Program through the Bank of New York to meet the growing demand and interest from US investors in the Company. This initiative forms part of White Energy’s strategy to provide increased international liquidity and expand its investor base in the US market.
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