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BRMS seeks to clear debt through share sale
Publicly listed mining firm PT Bumi Resources Minerals (BRMS) is looking to transfer its majority stake in subsidiary PT Dairi Prima Mineral to a Chinese counterpart by September, to become a debt-free company
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ublicly listed mining firm PT Bumi Resources Minerals (BRMS) is looking to transfer its majority stake in subsidiary PT Dairi Prima Mineral to a Chinese counterpart by September, to become a debt-free company.
The non-coal unit of Asia’s biggest coal exporter PT Bumi Resources signed a share purchase agreement (SPA) on April 29 for 51 percent of its 80 percent stake in Dairi Prima with China Nonferrous Metal Industry’s Foreign Engineering and Construction Co. (NFC), for US$198 million.
BRMS expects to jointly develop with NFC underground lead and zinc mines in North Sumatra, with reserves of 25 million tons of ore. The cost to develop those mines is expected to reach $430 million.
“We hope that we can start the construction of the mining sites in February next year,” BRMS operational director Suseno Kramadibrata said on Tuesday, while adding that NFC would inject $70 million of additional equity to support the project.
If everything goes as expected, BRMS will use $90 million of the proceeds to repay all of its debt to Swiss financial services company Credit Suisse.
In the first quarter of 2017, BRMS had total liabilities of $456.5 million. However, $232.1 million of debt has been restructured through a debt-to-equity swap, marked by the issuance of 36.75 billion new Series B shares priced at Rp 84 (1 US cent) apiece with no-preemptive rights in June.
Debt to Singapore-based Wexler Capital has been converted into shares worth $100.96 million, or 65.15 percent of its total receivables from BRMS. Meanwhile, $90 million worth of shares have been used to service debt to 1st Financial Company Limited and another $41.15 million worth of shares has been allocated to 12 different creditors.
“So, after we seal the deal with NFC, we will be relatively debt-free in October,” Suseno said.
After settling its debt, BRMS will be able to shift its focus to further develop its mining assets, including a gold mine in Poboya, Central Sulawesi, as well as gold and copper mines in Gorontalo, operated by subsidiaries PT Citra Palu Minerals and PT Gorontalo Minerals, respectively.
Citra Palu hopes to secure the construction permit for the Poboya gold mine, estimated to contain 6.7 million tons of ore, by October at the latest. Meanwhile, Gorontalo Minerals might get the permit in mid-2018 to develop its gold and copper mines with total resources of 400.6 million tons.
“BRMS has the potential to see significant growth, especially from its Poboya mine, which is expected to produce 1 million ounces of gold,” Samuel Sekuritas analyst Sharlita Malik said.
