black gold

black gold

Chairman's Statement

black gold

Extracted from Annual Report 2017

Dear Shareholders,

FY2017 was an important year for us, representative of the foundation which we have laid over recent years to boost our competitive advantage in the Indonesian coal mining space. In BlackGold, unity is strength. As a Group, the core of our success stems from a strong sense of cohesion across our teams. Our operations are well rooted in an integrated network of infrastructure supporting a seamless execution of the coal production process from our mines to end-customer delivery.

This year, we celebrate and take delight in forging new partnerships through the signing of a Heads of Agreement to form a new consortium with China Huadian Engineering Co., Ltd. (“CHEC”), PT Pembangkitan Jawa-Bali (“PJB”) and PT PLN Batubara (“PLN BB”), for the Riau-1 Project to develop a 2 x 300 MW mine-mouth coal-fired power plant in Riau province (the “Riau-1 Project”). This partnership between our consortium partners represents an opportunity for the Group to broaden its asset and earning bases as well as provides the Group a great opportunity to invest further into the Indonesian electrical power generation industry, from where we anticipate will provide positive and sustainable financial growth for the future.

Another partnership which we had formed was with you, the investor community. BlackGold had successfully completed three share placements in FY2017. The net proceeds from the share placements were used to strengthen the working capital position of the Group as well as business investment purposes, including developmental expenses relating to the Riau-1 Project. The Group and its employees have made a deliberate effort to ensure we have made the necessary preparations for what is to come in the year ahead. We thank you, our investors, for your confidence in us.

Operational Performance

Our employees have delivered another year of consistent performance in operations. This year, we are focused on delivering in our commitment to consistent and timely deliveries. We mark the first successful coal delivery to PLN Tenayan Power Plant under a longterm contract with PLN. In the second half of FY2017, the Group had signed an addendum to the Coal Sales Contract with PLN, where the selling price of coal sales would be revised upwards by approximately 10%, and was applied retrospectively on coal sales from March 2017 onwards.

Another milestone for the year is the completion of our own jetty at Kuala Cenaku, Riau province, yet another key infrastructural asset in the Group's supply chain and network of resources. With the jetty, it reduces reliance on external vendors for coal transportation, lowers operating costs and enhances our coal distribution capabilities which would have a positive impact on our operational performance in the long-term.

Acknowledgement

An organisation is only as strong as its people. We continue to take pride in gathering and developing a workforce that is full of talent, tenacity and diversity, each an expert in their respective fields of expertise. A management team of diverse and talented individuals brings to the table creativity in our business strategy, plans and considerations. Our employees have again delivered consistent positive developments in our operations this year.

Our Board of Directors has also been critical to our success thus far and we have benefitted immensely from their knowledge and guidance. Their conscientiousness and diligence as board members along with our key management team and advisors help ensure the Group's business decisions are adequately considered and well executed.

Finally, a big thank you to all our shareholders, for the dedication and unwavering support you have shown in us throughout the year. As we celebrate in the achievements which 2017 has brought us, we remain cognizant of the opportunities and challenges that lie ahead. The Group stays focused on delivering sustainable growth and long-term value to all our stakeholders through optimising productivity and maximising the value of our coal assets. Having progressed onto the production phase of our operations, we will continue ramping up production levels at our mine and keeping on track for completion of the Riau-1 Project.

Philip Cecil Rickard

Executive Chairman and Chief Executive Officer