Australian gold and copper producer, Straits Resources Limited (SRL), is pushing strongly into the international coal trade through its majority-owned regional development vehicle, the Singapore-listed, one-year-old Straits Asia Resources Limited (SARL).

SAR has announced that it has agreed to paying US$350M for 100% ownership of the Jembayan open cut thermal coal mine in Indonesia’s East Kalimantan, which claims a non-JORC resource estimate of 115Mt – with less than half the concession area explored.

The three-years-old mine is on a concession of nearly 13,000ha, 150km northwest of Balikpapan and 70km from the coast, with a forecast coal output for calendar 2007 of 4Mt and a current mine infrastructure capability to 5.4Mtpa.

SAR says that by adding Jembayan’s bituminous and sub-bituminous coal to its South Kalimantan Sebuku Island mine output, it will be targeting gross production from Indonesian assets of more than 9Mtpa.

It is buying Jembayan from project partners Mitsui Matsushima International and Pacific Communication Corp – which were running the mine through Indonesian company PT Separi Energy.

But it doesn’t stop there. SARL also has acquired two new coal concessions north of its Sebuku mine, outlaying US$25M for sole rights to mine a 375ha exploration area (KP) and to explore an additional 2,835ha tenement, both adjacent to SAR’s Sebuku coal contract of work area.

The company also holds rights to future production and sale of coal from four other undeveloped KPs.

Independent reviews of the coal deposits, based on data from drilling in 2003 and 2005, estimate the resources of the concessions at between 34Mt and 50Mt, some 4Mt of it immediately available for mining, SARL says.

Company CEO, Richard Ong, says SARL plans intensive exploration next year to establish JORC-compliant resource figures and he’s expecting the proposed new mining to produce coal at recovery costs similar to Sebuku – which is rated as among the least expensive coal mines in the world.

But SARL has had some headaches. It installed extra pumping equipment to bring Sebuku production back on track after declaring a force majeure early last August in the face of weeks of heavy rain.

During the September 2007 quarter, Sebuku mine produced 718kt of saleable coal and 841kt ROM product, taking the mine’s figures for the year to 30 September to 2.175Mt of saleable coal - down on the 2.5Mt for the year to 30 September 2006.

SARL now is forecasting Sebuku production for calendar 2007 at between 3.4Mt and 3.6Mt.

Also, SARL has entered a joint venture with Far East Energy (FEE) to investigate coal resources in Brunei under an exclusive MOU with the sultantate, with SAR being given the opportunity to earn up to 70% interest in any titles obtained by the JV.