Mining equipment supplier Emeco Holdings announced its Indonesian division will be in loss making following Straits Resources’ revelation it is placing its Mount Muro mine into care and maintenance.
Despite Straits attempts to implement a ‘turn-around strategy’ for the mine to put it into a “cashflow positive position’, it could not sustain the mine due to falling gold and silver prices and illegal miners.
Emeco responded to the revelation in a statement, saying PT Indo Muro Kencana, which operated MT Muro, is Emeco Indonesia’s main customer.
“It had been anticipated that PTIMK would represent a significant source of revenue for Emeco Indonesia in FY14. In light of this development the Indonesian business is now expected to be loss making in the current financial year in the absence of any major new contract wins.
“Emeco Indonesia’s utilisation was 30 per cent immediately prior to this announcement,” Emeco said in a statement.
PTIMK owes Emeco Indonesia $US9.8 million. A large part of this is covered by credit insurance of $US8.3 million.
The company expects fleet mobilisation costs to be around $US1.2 million, which it said is owed by PTIMK.
Emeco Indonesia is still waiting to hear from PTIMK on how it intends to fulfil other contractual obligations.
It will wait to hear from them before deciding its next course of action.