Straits Asia

Straits Asia: confirms significant upgrade in the coal Resources and Reserves at its Jembayan Operation. Reserves and resources both +21% over half yr to 127 MT, 610 MT respectively. Measured and indicated resources combined recorded a much higher increase of 50%, and now represent 84% of total resources (from 67% previously)…

Expect market to react positively, as the increase in coal reserves and resources would translate to higher valuation of the mine. Also the upgrade in JORC classification provides greater confidence in the quality of coal resources. Although we note that the majority of the Street currently rates SAR as Hold, with targets ranging from $1.95-2.20, on the back of slightly disappointing 2Q10 results, and uncertainty regarding the Sebuku permits.