Interra Resources announced it has entered into a joint venture with two Indonesian companies, PT Mitra Investindo (MITI) and PT Prima Aset Lestari (PAL) on October 9 to form a new joint venture company in Indonesia called PT Mitra Biomass Internasional.

 

MITI is listed Jakarta Stock Exchange and it operates a fleet of vessels catering to different sectors of the logistics sector. PAL is a private company whose shareholders are Akbar Rival and Edy Sumarso who own 60% and 40% respectively of PAL. The JV Company is a foreign investment limited liability company incorporated in Indonesia, which will build and operate a wood pellet plant in Sumatra.

 

Interra&rsquo s initial investment is for around 40% of the JV Company for US$282,000. The entire cost of the the joint-venture is estimated at US$4.8 million, and Interra&rsquo s share is estimated at US$1.92 million.

 

Wood pellets are biofuels made from residuals left from the wood industry, Interral says in a statement. " They are widely used as fuel in Europe, North America, South Korea and Japan. In recent years, its use has also been on the rise in China, Thailand and Indonesia as the world turns towards renewable, sustainable energy sources. Wood pellets are currently one of the most widely used forms of biofuel, and the outlook for this product is very promising," Interra says.

 

Ng Soon Kai, a former director of Interra Resources, made a quick flip with a substantial chunk of shares of the company he had bought and held for barely two weeks. On July 13, Ng sold around 5.75 million shares on the open market for about $195,831 or 3.4 cents each. With the sale, his stake has been reduced from just below 57.6 million shares or 8.79% to just over 51.8 million or 7.91%.

 

Less than a fortnight before the sale, Ng was in acquisition mode instead. On July 3, he had acquired 5.78 million shares at some $167,894 or 2.9 cents each. Ng, who left the company&rsquo s board recently, first emerged as a substantial shareholder on June 21 when the company disclosed in a filing that he had acquired 3.46 million shares for $99,806 on the open market, raising his stake to 5.01% from 4.48% previously.

 

Since then, he has bought shares on at least two other days. On June 27, he acquired 5.26 million shares for $152,540 or 2.9 cents each while on June 30, he acquired 10.45 million shares at about $292,690 or 2.8 cents each.

 

On June 7, Interra Resources, which holds stakes in oil production operations, announced that testing of an exploration well in a block at Indonesia&rsquo s southern Central Kalimantan did not perform as expected.

 

The well, dubbed KP-1, is operated by an entity called PT Mentari Pambuang Internasional, in which Interra Resources holds a 72.75% stake. &ldquo The well has now been temporarily suspended to allow for the recovered oil samples to be analysed and interpretation to be carried out,&rdquo says Interra Resources, adding that exploration costs of the block to date have reached US$13.7 million ($18.16 million), which is above net present value based on an independent review of US$9 million.

 

As such, the company is making an impairment on exploration cost of approximately US$4.7 million. Even so, at current levels, Interra Resources is trading at a historical P/E of 1.65x.