Geo Energy's $154 Million Acquisition Linked to $1 Billion Valuation of Coal Mining Concession

An independently conducted assessment report has provided Geo Energy Resources, a prominent Indonesian coal producer, with a notable affirmation regarding its recent acquisition of a substantial 58.7% stake in Golden Eagle Energy, an Indonesia-listed coal miner. This strategic acquisition, amounting to $154.1 million, is expected to significantly amplify Geo Energy's overall value and position within the industry.

The announcement was made on August 24, coinciding with the unveiling of the assessment report. The report is intricately linked to the core asset of Golden Eagle Energy, which revolves around a coal mining concession recognized as Triaryani. The valuation, expertly undertaken by the qualified entity RungePincockMinarco, has ascribed an estimated valuation of approximately $1 billion to this coal mining concession. It's important to note that this valuation is primarily linked to the foundational asset of Golden Eagle Energy, that being the coal mining concession situated under the mantle of Triaryani.

This noteworthy coal mining concession is strategically located within the South Sumatra province of Indonesia. As of May 31, an in-depth evaluation revealed that the concession encompasses a substantial coal resource amounting to an impressive 388 million tonnes. Furthermore, coal reserves within the concession were identified to be around 275 million tonnes. These quantitative findings formed the basis upon which the valuation process was meticulously carried out.

The valuation exercise also took into consideration the assessment of the total net present value, which in a preferred scenario stood at $957 million. This value was based on a consistent coal price assumption. However, for a more dynamic evaluation that factored in variable coal price projections, the valuation amounted to $809 million. These valuations were meticulously calculated, reflecting the comprehensive and diligent approach taken by the independent assessment process.

A noteworthy aspect of the valuation process was the employment of a probabilistic modeling technique that integrated key economic variables. This approach enabled the derivation of values through an income-centric perspective. The cornerstone of this valuation methodology was the utilization of a discounted cash flow model, underpinned by a base discount rate of 12%. This robust framework ensured the credibility and accuracy of the valuation outcomes.

Geo Energy has emphasized the significant strategic implications arising from the independent valuation of the concession and the substantial growth prospects within the integrated infrastructure sector. The company's board of directors unequivocally views the acquisition of Golden Eagle Energy as a strategic move that enhances the value proposition for Geo Energy as an entity.

The valuation report is emblematic of Geo Energy's unwavering commitment to transparency and informed decision-making. Through this independent validation, Geo Energy has not only gained a deeper understanding of the inherent value associated with its recent acquisition but has also laid the groundwork for strategic planning and future developments.

Leveraging a rigorous assessment methodology that accounts for various economic variables, Geo Energy's aspiration is to elevate not only its investment decision-making process but also to harness the insights gained from the valuation to effectively steer its operational strategies. The valuation report serves as an invaluable tool, enabling Geo Energy to comprehensively evaluate the potential returns and long-term prospects intrinsic to its recent acquisition. This strategic insight empowers the company to effectively capitalize on its well-thought-out endeavors within the ever evolving and dynamic landscape of the coal mining industry.