PEFINDO assigns idBBB+ rating to J Resources' MTN

(October 31, 2022)--PEFINDO has assigned its idBBB+ rating to PT J Resources Asia Pasifik Tbk (PSAB)’s MTN I Year 2022 of IDR400 billion. At the same time, PEFINDO has affirmed its idBBB+ rating to PSAB and its Shelf-Registered Bond I. The outlook for the corporate rating is stable.

The corporate rating reflects PSAB’s sizeable mining reserves and resources, expectations of low cash cost from new project, and the high demand for gold. The rating is constrained by its aggressive capital structure, exposure to the fluctuation of gold prices, and risks related to the development of new mines.

The rating may be raised if PSAB fully operates its new project in Doup and improves its capital structure, as indicated by a debt to EBITDA ratio below 2.5x on a sustained basis, while improving its cash cost position from new project. This should also be accompanied by a sustained increase in its mining reserves and gold production volume. The rating may be under pressure if it fails to secure loan facilities in the upcoming months resulting in delays of the construction of Doup project, which may result in significantly lower production volume than projected in the near term as well as higher refinancing risks as PSAB will be rely on proceeds from Doup to repay its loans. A delay in Doup development will negatively impact PSAB’s revenue which will further aggravate its financial profile. Its rating may be lowered if it aggressively finances the expansion with substantially larger debt than projected, without being compensated for by a stronger revenue and/or EBITDA. A significant drop in the price of gold may also trigger a rating downgrade, as this may adversely affect its financial figures.

PSAB was established in 2002 under the name PT Pelita Sejahtera Abadi and commenced mining operations in 2012 after acquiring assets from Avocet Mining. Its operations cover the exploration, mining, and processing of gold. It has a geographically diverse portfolio of assets across Indonesia (Seruyung in North Kalimantan; and Bakan, Lanut, and Doup in North Sulawesi) and Malaysia (Penjom).

The Company owned two producing mines and one mine in construction stage. As of June 30, 2022, its shareholders consisted of Jimmy Budiarto (92.50%), Sanjaya J (0.02%), and the public (7.48%). (ends)