Borneo Resource Investments Ltd. Issues Letter to Shareholders
BOTHELL, Wash., Jan. 24, 2012 /PRNewswire/ — Borneo Resource Investments Ltd. (OTCPK: BRNE), announced today that it has issued a letter to its shareholders.
Borneo Chairman and CEO, Nils Ollquist commented, “As a relatively new publicly traded company, we are sensitive to the fact that currently very little information is available in the public domain regarding our activities.”
“After our merger and acquisitions, we wanted to update our existing shareholders, and also provide an overview of our company for both retail and institutional investors taking a closer look at Borneo.”
The content of the letter is included below in its entirety.
To our shareholders,
Borneo Resource Investments Ltd. (“Borneo”) is focused on the acquisition, exploration and development of high-quality thermal coal properties in the East Kalimantan province of Borneo, Republic of Indonesia.
Indonesia is the largest exporter of thermal coal in the world and the 2nd largest exporter of coal overall behind Australia.
Borneo is managed by a proven team of executives with significant experience in finance and project management. I myself have over 30 years of international banking and corporate finance expertise, which included several years as a project and resource finance manager with a major European bank. I also have extensive experience with coal and iron ore financing in my native Australia.
Importantly, for the expansion of our business, we have developed very strong ties with the local Indonesian business leaders in East Kalimantan. Our COO, Mr. Carlo Muaja, is an Indonesian national who was born in East Kalimantan. His network of relationships in Indonesia, both within the public and private sectors, has proven immensely valuable. He is responsible for the Company’s resource and concession acquisition strategy.
The rest of our management team, including our CFO R. Scott Chaykin, consists of proven leaders who understand public company finance and operations.
Borneo’s business model is that of a Project Generator and coal trader. To build shareholder value, the Company seeks to acquire highly prospective thermal coal mining rights primarily in East Kalimantan, Indonesia, a highly-stable mining jurisdiction. Our objective is to add value through grassroots exploration and target refinement and then seek option or joint venture partners through to production.
The Project Generator model is particularly suited to the Company’s ongoing interest in the East Kalimantan province where Borneo has a wealth of intellectual capital and experience.
To add to cash flow and reduce the need for dilutive financings to fund its activities, Borneo engages actively in coal trading. Management seeks to identify and broker transactions between buyers and sellers, earning a profit as the intermediary.
The Company currently has interests in two thermal coal exploration projects in East Kalimantan province with an estimated resource potential of 12-14 million metric tonnes, pending confirmation by geological studies. The first is an 80% interest in PT Chaya Meratus Primecoal (“Meratus”), an Indonesian company holding exclusive exploration and development rights for up to 6,000 hectares in the Tanjung Area Basin of south east Kalimantan. The second is an exploration and production license covering 1,300 hectares in the East Kalimantan province through an agreement with the concession holder, PT Integra Prime Coal (“Integra”). The Company also has an extensive pipeline of additional projects under review for potential licensing or acquisition. East Kalimantan has the distinction of being at the epicenter of thermal coal mining and exports from Indonesia. For context, most of the country’s coal mines, including the largest, are located in East and South Kalimantan and two of the world’s largest coal mining companies, BUMI and Adaro Resources operate in the region. Our concessions show extensive coal formations at the surface, and preliminary field work by our field geologists give us a high level of confidence in the resource estimates previously mentioned.
Currently our projects do not have JORC-compliant resource estimates, which is one of the standards used in the mining industry to assure shareholders and other stakeholders that the resources a company says they have are in fact present. We are actively engaged in securing JORC estimates for both of our concessions, and will do so for all additional concessions we acquire. This will significantly increase our Company’s attractiveness to institutional investors.
Indonesia’s Competitive Advantage
Coal production costs in Indonesia are among the lowest in the world with a general range between US$40 and US$50 per metric tonne. This can be attributed to a large degree on the shallow nature of the coal deposits, their close proximity to barges and port facilities on navigable rivers, and being near the coast. The current price (Newcastle Benchmark) of thermal coal at US$112 per metric tonne highlights the considerable margins for Indonesian mining companies.
The high price of coal and low cost of mining is attracting a substantial amount of investment capital from around the world, in particular from Asian markets where thermal coal is in high demand. In fact, Indonesia recently had its credit rating raised to “investment grade” by Fitch. This opens up the country to higher levels of Foreign Direct Investment (FDI), most of which will inevitably flow into natural resources.
On December 13, 2011 the International Energy Agency (IEA) issued a report entitled “Medium-Term Coal Report 2011″. Several quotes from the press release accompanying the report stood out, including:
“Global demand for coal will continue to expand aggressively over the next five years despite public calls in many countries for reducing reliance on the high-carbon fuel as a primary energy source…”
“Coal is already the single-largest source of electricity generation globally, and the report says the main reason for the projected increase in coal demand over the next five years is surging power generation in emerging economies [particularly from China and India].” [emphasis added]
Put simply, the global geographic center of this supply and demand imbalance is Asia. Standing at the geographic and geologic center of Asia is Indonesia. Asian economies have massive appetites for thermal coal to meet both electricity generation and industrial needs.
Developed economies like Japan, South Korea and Taiwan have large and established demand growing at a slow and steady pace. At the same time consumption from emerging markets, particularly China and India, but also Vietnam and Indonesia, is growing at a rapid pace. Many of these emerging markets are struggling to keep pace with the basic demand for electricity by their populations. As such securing adequate coal supplies represents a critical security and stability issue and as such represents a high-priority for policy makers in these countries.
As highlighted earlier, Indonesia is uniquely poised to feed burgeoning Asian demand for thermal coal. It has a hungry market at its doorstep ready to consume all of the thermal coal the country can produce and export. In addition to being well-located to meet demand, the quality of Indonesian coal and the low cost of production provide additional incentives for Asian customers to target Indonesian coal for consumption and production.
Needless to say, all of this bodes well for our Company and its shareholders.
We have accomplished a lot since our reverse merger in August 2010. Your company’s management concluded a successful capital raise of US$1MM, and we are currently involved in another private placement at over twice the valuation of the first. Once completed, this raise will insure that we have sufficient capital to execute on our plans for the next year.
Our audits by a U.S. PCAOB firm are almost complete, and we will soon file the necessary documentation to make us a fully-reporting company with the U.S. Securities and Exchange Commission. This will allow us to pursue our goal of listing Borneo’s shares on a senior exchange, something we are working on with our legal counsel and advisors.
Management continues to compile a portfolio of high-quality thermal coal concessions. Our goal of becoming one of the most significant thermal coal concession holders in East Kalimantan is well on its way to being realized.
To increase shareholder communication and interaction we recently engaged an experienced investor relations specialist. They are helping to communicate our message within the investment community and also working on increasing the visibility and liquidity for our shares in the retail market. Our new website, www.borneore.com is just one of their current projects.
Looking back at the road we have traveled together this past six months, I believe that it is safe to say that our efforts have ensured that Borneo is well-positioned to meet the challenges that 2012 will bring.
Inspiration, determination, success; these are the core values that drive your Company, and I am delighted that you, our shareholders, have joined us on this journey.
Chairman and CEO
About Borneo Resource Investments Ltd. (BRNE).
Borneo Resource Investments Ltd., with and through its wholly-owned subsidiary Interich International Limited, obtains mining concessions to explore and develop coal reserves primarily in the East Kalimantan region of the Republic of Indonesia.
This press release contains forward-looking statements within the meaning of the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995 and federal securities laws. For example, we are using forward looking statements when we discuss the indications that estimate the value and amount of our coal reserves. These forward-looking statements are based on the current expectations of the management of Borneo Resource Investments Ltd. only, and are subject to a number of factors and uncertainties that could cause actual results to differ materially from those described in the forward-looking statements. The following factors, among others, could cause actual results to differ materially from those described in the forward-looking statements: changes in the price of coal, a change in the estimate of coal on our concessions, an inability to extract the coal reserves and changes in Indonesian law. Except as otherwise required by law, Borneo Resource Investments Ltd. undertakes no obligation to publicly release any revisions to these forward-looking statements to reflect events or circumstances after the date hereof or to reflect the occurrence of unanticipated events.
SOURCE Borneo Resource Investments Ltd.