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Lanna Resource has had to forfeit one of its three coal concessions in Indonesia due to force majeure.

Citra Harita Mineral (CHM), Lanna's 55-per-cent-owned subsidiary registered in Indonesia, reported yesterday that it had been informed in writing by its partner, Cahaya Tiara (CT), on Thursday that the Supreme Court of Indonesia had decided to revoke CT's licence.

In 2004, CHM entered into a coal-mining cooperation agreement (CMCA) with CT for the concession area covered by CT's licence. CHM had the right to conduct coal production and distribution until 2014. Current reserves are estimated at 1.37 million tonnes.

Lanna said the dispute was between the Indonesian public sector and the previous concession-holder and had nothing to do with CHM and CT.

However, the matter is considered force majeure, which has resulted in the termination of the CMCA and all related agreements.

CHM must immediately stop its coal production and distribution within the licensed coal concession area of CT.

Lanna still has two other coal-mining concessions in Indonesia that can support future coal production and distribution.

It directly holds 55 per cent in one project with a 30-year mining concession to produce and distribute coal until 2031.

Its mineable coal reserves have been estimated at over 15 million tonnes. Current annual coal production and distribution is 1.5 million tonnes.

It has a 65-per-cent indirect interest in the other project with a 30-year concession to produce and distribute coal.

Initial assessment has indicated that the project has mineable coal reserves of over 25 million tonnes.

Coal production and distribution is expected to start by the end of this year with estimated coal production capacity for the first year of 1 million tonnes, increasing to 2 million tonnes for the following years.

Although the volume of Lanna's coal sales this year will be reduced due to the halt of mining at one project, its operating results are not expected to suffer since coal prices have surged since last year.