Nannook, I've gone back and read a previous update which announced the agreement with Bayan. It seems it is a bit of both. Part of the contract price for the coal will be paid on delivery into the Mamahak stockpile. This hopefully will be enough to cover the immediate operating and mining costs. The balance is then paid once loaded onto barges at Mamahak jetty under normal FOB terms. I expect that this portion will be where the cash flow comes from to support their other endeavors, and this portion will obviously be subject to river conditions.
As far as the cash flow is concerned, probably not a lot has changed. KRL will have cash available to meet the cost of their mining operation, whereas before that money would have to come from elsewhere, or they simply didn't pay their contractors until some sales were completed, which is quite a common practice in mining coal in Indonesia. When the river level falls, barging will cease, and thus the final payments,but at least mining should be able to continue as long as there is room in the stockpile.
KRL Price at posting:
12.5¢ Sentiment: None Disclosure: Not Held
