Geo Energy Resources responds to SGX queries

They pertained to a mining services contract and a coal purchase contract.

The Board of Directors of Geo Energy Resources Limited issued the following, in response to queries from the Singapore Exchange Securities Trading Limited:

Query:
What is the duration of the Coal Purchase Contract?

Response:
Article 4(2) of the Coal Purchase Contract states that “The contract shall be effective on the date of signing and remain effective until the Parties have exercised and performed all of their respective rights and obligations hereunder.”

In accordance with Article 1 of the Coal Purchase Contract, Arini has agreed to sell and deliver the coal produced from the Work Block exclusively to MNP and has guaranteed that the coal existing in and to be produced from the Work Block shall be no less than 4 million metric tonnes.

As such, the Coal Purchase Contract shall continue to be valid until Arini has sold and delivered 4 million metric tonnes of coal to MNP. The volume of coal to be delivered to MNP shall be at least 1 million metric tonnes per year or such other volume as may be required by MNP.

Query:
The Announcement states that “Arini has guaranteed that the coal existing in and to be produced from the Work Block shall be no less than 4 million metric tonnes”. Please clarify the basis on which the figure of 4 million metric tonnes was arrived at.

Response:
The figure of 4 million metric tonnes was calculated by Arini based on exploratory activities it had undertaken. Such results were made available to MNP, who has commenced drilling and boring works at the Work Block to ascertain the coal deposit.

Query:
The Announcement states that “MNP shall pay a down payment of US$5 million to Arini by instalments….”. Please clarify the number of instalments to be made by MNP and the duration given to MNP to complete the payment of all the instalments.

Response:
Under Article 7 of the Coal Purchase Contract, the instalments will be paid as follows:

(a) The amount of US$ 300,000 upon the signing of the Coal Purchase Contract;

(b) The amount of US$ 2,200,000 when (i) the result of MNP’s drilling and boring at the Work Block indicates that the coal deposit has reached 1 million metric tonnes with agreed coal specifications and average stripping ratio; (ii) the requisite land has been acquired by Arini; (iii) the land clearing and stripping of overburden by MNP has run smoothly without any claim or suit from any other party; and (iv) the shareholders of Arini has provided MNP with a pledge over all the shares in the capital of Arini; and

(c) The amount of US$ 2,500,000 when the coal deposit at the Work Block has reached 4 million metric tonnes with agreed coal specifications.