Risk Factors

“Geo Energy’s risk factors are well mitigated by strategic partnership
with major players in the industries as well as a nimble and
cost competitive business model.”

Exposed to commodity price fluctuations
The current and expected future price of coal, being a commodity, can change rapidly and significantly. This may have a substantial effect to Geo Energy’s business, financial performance, financial condition and results of operations due to a direct impact to the Group’s revenue derived from coal sales. However, this is mitigated by a nimble and cost competitive business model as well as strong outlook for the industry.

Marketing volume risk
Based on Wood Mackenzie Coal Market Service, 2015, the long term global thermal coal demand is expected to remain strong. Furthermore, the Group’s marketing volume risk is mitigated through long term coal offtake contract with international commodity trading houses.

Operational risk
The Group’s operational risk is mitigated by outsourcing the mining services to BUMA, one of the largest mining contractors in Indonesia. The agreement with BUMA guarantees a minimum annual production volume, and further allow the Group to control its cost of production and secure a long-term service provider at the same time.