Improvement on future operating margins
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.
"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
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
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: w.bloking@kalenergyinc.com Lucia Domville - Investor Relations Grayling Global T: +1 (646) 284-9416 E: ldomville@hfgcg.com Ivette Almeida - Media Relations Grayling Global T: +1 (646) 284-9455 E: Ialmeida@hfgcg.com
SOURCE KAL Energy, Inc.