KAL Energy Enters Into Amended Royalty Agreement
06 Oktober 2008 - 5:31PM
PR Newswire (US)
Improvement on future operating margins NEW YORK, Oct. 6
/PRNewswire-FirstCall/ -- KAL Energy, Inc. (OTC Bulletin Board:
KALG), a thermal coal explorer and developer, today announced that
it has successfully amended the terms of its royalty agreement with
Concord International. Under the terms of the new agreement, the
Company will pay royalties as follows: 1. For all coal sales under
$40 per metric ton the royalty is reduced from $0.40 per metric
ton, indexed annually with inflation, to $0.20 per metric ton fixed
and flat. 2. For all coal sales over $40 per metric ton, the
royalty is changed from $0.40 per metric ton, indexed annually with
inflation, to the higher of $0.40 per metric ton or 0.65% of the
price of coal per metric ton. 3. The Company will also make a one
time payment of $15,000 at the time of the first coal sale in
exchange for a waiver on all royalties for the first three years of
production. William Bloking, Executive Chairman and President of
KAL Energy, Inc. said, "The Company is focused on improving margins
from our coal concessions. This measure allows the Company to
improve its margins at the lower end of the coal price band, whilst
capping the margin impact at higher coal prices. "We are firmly
committed to improving shareholder value, and one of the ways of
doing this is to proactively identify opportunities that improve
future returns for the Company. We have targeted a reduction in the
overall royalty rate as well as the elimination of CPI indexation,
given its potential to erode margins during times of decreasing
coal prices. This agreement also reduces the royalty impact during
the initial production years as we stabilize production and
operating costs. "It is difficult to quantify the impact of these
royalty changes with precision given the variables in play,
including production levels, future coal prices, and future
inflation rates. However, over a coal price range of US$35 - US$50
per metric ton, and assuming production levels of 2 - 5 million
metric tons per annum, royalty savings could be as high as US$1
million per year," Mr. Bloking added. About KAL Energy, Inc. KAL
Energy, Inc, through its wholly owned subsidiary of Thatcher Mining
Pte. Ltd., has economic rights to two coal concessions near the
Mahakam River in East Kalimantan, Indonesia, one of which has a
JORC Compliant resource of 204 million metric tons. KAL Energy has
commenced exploration programs and feasibility studies on these
concessions to determine their commercial viability. The Company
intends to develop and produce coal from these concessions in a
socially, environmentally and economically sustainable manner, as
guided by the Equator principles. End markets for KAL's thermal
coal product include local Indonesian consumers as well as export
markets in India, China, North Asia, and Southeast Asia. KAL Energy
is incorporated in the State of Delaware and is publicly traded on
the NASDAQ OTCBB. For further information regarding KAL Energy,
Inc., please visit the website at http://www.kalenergyinc.com/.
Contact: William Bloking Executive Chairman and President KAL
Energy, Inc. Email: Lucia Domville - Investor Relations Grayling
Global T: +1 (646) 284-9416 E: Ivette Almeida - Media Relations
Grayling Global T: +1 (646) 284-9455 E: DATASOURCE: KAL Energy,
Inc. CONTACT: William Bloking, Executive Chairman and President of
KAL Energy, Inc., ; or Investor Relations, Lucia Domville,
+1-646-284-9416, , or Media Relations, Ivette Almeida,
+1-646-284-9455, , both of Grayling Global Web Site:
http://www.kalenergyinc.com/
Copyright