Lim & Tan Securities Research Report March 28, 2025
Unlocking Value in Geo Energy’s Integrated Infrastructure Project
Executive Summary Geo Energy Resources Limited (SGX: RE4) has announced several strategic moves that position the company for significant growth in the coming years. The key highlights include:
Acquisition of an additional 15% stake in its PT Triaryani (TRA) coal mine, increasing its effective interest to 75.07%
Signing of non-binding term sheets with two major mining groups for the usage of its MBJ Integrated Infrastructure project
A potential investment of $50-100 million from a leading commodities investment company, Resource Invest AG (ResInvest)
These developments underscore Geo Energy’s focus on expanding its coal production capacity, enhancing its infrastructure capabilities, and unlocking value for shareholders. The article delves into the details of these initiatives and analyzes their implications for the company’s future performance.
Boosting Stake in Prized TRA Coal Asset Geo Energy has entered into a conditional shares sale and purchase agreement to acquire an additional 15% effective interest in its TRA coal mine for $40.8 million. This will increase the company’s effective interest in TRA to approximately 75.07%.
TRA’s producing coal mine consists of reserves with low sulfur and ash content, which are in high demand from both domestic and international markets, particularly in Asia. According to an Independent Qualified Person’s Report, TRA’s 2P (proved and probable) JORC reserves stood at 274 million tonnes as of December 31, 2023, with plans to increase this to over 300 million tonnes through additional drilling and exploration.
Commenting on the acquisition, Geo Energy’s Executive Chairman and CEO, Mr. Charles Antonny Melati, said: “Given the strong fundamentals of the TRA coal mine and the growth trajectory, boosting our effective interest in TRA via this acquisition is a natural step to maximize the long-term value for our shareholders.”
Integrated Infrastructure Project Gains Traction Geo Energy’s subsidiary, MBJ, has made significant progress in its Integrated Infrastructure project, which is set to unlock substantial value from the TRA mine. MBJ has signed non-binding term sheets with two major mining groups for the usage of its infrastructure:
TRV, a coal mine owner with diversified operations in India, Indonesia, and Africa, has agreed to a volume of 15 million tonnes of coal per annum for up to 50 years.
PT Astaka Dodol, a coal mine owner with operating mines in the South Sumatra region, has agreed to a volume of up to 10 million tonnes of coal per annum for 10 years, with the potential to extend the tenure.
These agreements represent significant commitments from major coal producers, reinforcing MBJ’s role as a key coal logistics hub in South Sumatra. They also support MBJ’s revenue model and enhance Geo Energy’s infrastructure monetization strategy.
Commenting on these developments, Mr. Melati stated: “MBJ is more than just an infrastructure project, it’s a game-changer for Sumatra’s natural resources industry, unlocking market access for over 2 billion tonnes of reserves in the region. This initiative enhances supply chain efficiency, cost-effectiveness, and sustainability, delivering long-term value for all stakeholders.”
Potential Investment from Leading Commodities Firm Geo Energy has also entered into a non-binding Memorandum of Understanding (MOU) with Resource Invest AG (ResInvest), a leading commodities investment company, regarding an investment of $50-$100 million in MBJ and potential co-investments with Geo Energy.
The MOU further states that at full capacity, MBJ’s valuation should exceed $1.5 billion. This potential investment from ResInvest, a 6.6% substantial shareholder of Geo Energy, underscores the confidence in the company’s growth prospects and the strategic value of the Integrated Infrastructure project.
Valuation and Recommendation At the current share price of $0.325, Geo Energy is valued at $460 million and trades at an undemanding forward consensus P/E ratio of 4-5x (consensus earnings of $90 million) while its price-to-book ratio is 0.7x and dividend yield is 3%.
Given the company’s growth trajectory, the Bloomberg consensus 1-year target price of $0.64 suggests almost a doubling of the current share price. The earnings and dividend outlook for FY2025 is also expected to be “exciting” as production volumes expand significantly and the new acquisition provides incremental earnings.
Additionally, the potential injection of $50-$100 million by ResInvest, coupled with the independent valuation of MBJ at over $1.5 billion, could serve as a re-rating catalyst for Geo Energy’s shares.
In conclusion, Geo Energy’s strategic initiatives, including the TRA mine acquisition, Integrated Infrastructure project, and potential investment from ResInvest, position the company for substantial growth and value creation. We believe an “Accumulate” recommendation is justified for investors looking to capitalize on Geo Energy’s compelling fundamentals and upside potential.

Unlocking Value in Geo Energy’s Integrated Infrastructure Project

Boosting Stake in Prized TRA Coal Asset

Geo Energy Resources Limited (SGX: RE4) has announced that it has entered into a conditional shares sale and purchase agreement to acquire an additional 15% effective interest in its PT Triaryani (TRA) coal mine for \$40.8 million. This will increase the company’s effective interest in TRA to approximately 75.07%.

TRA’s producing coal mine consists of reserves with low sulfur and ash content, which are in high demand from both domestic and international markets, particularly in Asia. According to an Independent Qualified Person’s Report, TRA’s 2P (proved and probable) JORC reserves stood at 274 million tonnes as of December 31, 2023, with plans to increase this to over 300 million tonnes through additional drilling and exploration.

Commenting on the acquisition, Geo Energy’s Executive Chairman and CEO, Mr. Charles Antonny Melati, said: “Given the strong fundamentals of the TRA coal mine and the growth trajectory, boosting our effective interest in TRA via this acquisition is a natural step to maximize the long-term value for our shareholders.”

Integrated Infrastructure Project Gains Traction

Geo Energy’s subsidiary, MBJ, has made significant progress in its Integrated Infrastructure project, which is set to unlock substantial value from the TRA mine. MBJ has signed non-binding term sheets with two major mining groups for the usage of its infrastructure:

• TRV, a coal mine owner with diversified operations in India, Indonesia, and Africa, has agreed to a volume of 15 million tonnes of coal per annum for up to 50 years.
• PT Astaka Dodol, a coal mine owner with operating mines in the South Sumatra region, has agreed to a volume of up to 10 million tonnes of coal per annum for 10 years, with the potential to extend the tenure.

These agreements represent significant commitments from major coal producers, reinforcing MBJ’s role as a key coal logistics hub in South Sumatra. They also support MBJ’s revenue model and enhance Geo Energy’s infrastructure monetization strategy.

Commenting on these developments, Mr. Melati stated: “MBJ is more than just an infrastructure project, it’s a game-changer for Sumatra’s natural resources industry, unlocking market access for over 2 billion tonnes of reserves in the region. This initiative enhances supply chain efficiency, cost-effectiveness, and sustainability, delivering long-term value for all stakeholders.”

Potential Investment from Leading Commodities Firm

Geo Energy has also entered into a non-binding Memorandum of Understanding (MOU) with Resource Invest AG (ResInvest), a leading commodities investment company, regarding an investment of \$50-\$100 million in MBJ and potential co-investments with Geo Energy.

The MOU further states that at full capacity, MBJ’s valuation should exceed \$1.5 billion. This potential investment from ResInvest, a 6.6% substantial shareholder of Geo Energy, underscores the confidence in the company’s growth prospects and the strategic value of the Integrated Infrastructure project.

Valuation and Recommendation

At the current share price of \$0.325, Geo Energy is valued at \$460 million and trades at an undemanding forward consensus P/E ratio of 4-5x (consensus earnings of \$90 million) while its price-to-book ratio is 0.7x and dividend yield is 3%.

Given the company’s growth trajectory, the Bloomberg consensus 1-year target price of \$0.64 suggests almost a doubling of the current share price. The earnings and dividend outlook for FY2025 is also expected to be “exciting” as production volumes expand significantly and the new acquisition provides incremental earnings.

Additionally, the potential injection of \$50-\$100 million by ResInvest, coupled with the independent valuation of MBJ at over \$1.5 billion, could serve as a re-rating catalyst for Geo Energy’s shares.

In conclusion, Geo Energy’s strategic initiatives, including the TRA mine acquisition, Integrated Infrastructure project, and potential investment from ResInvest, position the company for substantial growth and value creation. We believe an “Accumulate” recommendation is justified for investors looking to capitalize on Geo Energy’s compelling fundamentals and upside potential.