Fitch revises outlook on Golden Energy to 'positive' from 'stable'

Vivienne Tay

Published Mon, Apr 11, 2022 · 12:20 PM

FITCH Ratings on Sunday (Apr 10) revised its outlook on Golden Energy and Resources (Gear) AUE : AUE 0%to "positive" from "stable". The credit rating agency has also affirmed the coal miner's long-term foreign-currency issuer default rating (IDR) at B+.

The revision in outlook comes as Fitch expects an improvement in the credit profile of Gear's key subsidiary, Golden Energy Mines (GEMS), in the next 12 to 18 months. GEMS' production scale may also match its BB- rated peers in Indonesia.

Fitch has also revised its outlook on GEMS to "positive" from "stable" and affirmed its long-term foreign-currency IDR rating at B+. The rating reflects GEMS' competitive cost position, long reserve life and strong financial profile.

GEMS' reserves are the fourth-largest in Indonesia, with about 800 million tonnes of proven reserves and 1,000 million tonnes of probable reserves - translating to a reserve life of 20 years.

Fitch is also projecting annual production to ramp up to 50-55 million tonnes per annum over the medium term, in line with management guidance. This factor, coupled with the miner's flexibility to manage costs to move in tandem with coal prices and GEMS' low-cost structure, may lead to a sustainable increase in the subsidiary's operating cash flow.

Fitch expects the credit profile of Stanmore Resources, Gear's other key subsidiary, to benefit from the US$1.3 billion acquisition of Dampier Coal which will increase Stanmore's scale and diversity.