Moodys - Credit Opinion

CORPORATES CREDIT OPINION 17 November 2021 Update RATINGS Golden Energy And Resources Ltd Domicile Singapore Long Term Rating B1 Type LT Corporate Family Ratings Outlook Stable Please see the ratings section at the end of this report for more information. The ratings and outlook shown reflect information as of the publication date. Contacts Maisam Hasnain, CFA +65.6398.8325 VP-Senior Analyst Yu Sheng Tay +65.6311.2652 Associate Analyst Annalisa Di Chiara +852.3758.1537 Senior Vice President Ian Lewis +65.6311.2676 Associate Managing Director Golden Energy And Resources Ltd Update following proposed Australian metallurgical coal mines acquisition Summary Golden Energy And Resources Ltd' s (GEAR) B1 corporate family rating (CFR) is supported by its 62.5% effective ownership of PT Golden Energy Mines Tbk (GEMS), an Indonesian thermal coal producer with growing production volumes and a long reserve life, supported by its integrated operations; and increasing diversification from its ownership in metallurgical coal and gold mining assets in Australia. GEAR's CFR is constrained by its dependence on cash dividends from subsidiaries, in particular from GEMS, to service its debt; limited track record of steady dividends from its non-GEMS investments; its exposure to the cyclical thermal and metallurgical coal sector; and rising governance risks associated with its increasingly complex group structure. On 8 November 2021, GEAR’s subsidiary Stanmore Resources Limited (Stanmore) signed a definitive share purchase agreement with BHP Minerals Pty Ltd (BHP) to acquire BHP’s 80% effective interest in BHP Mitsui Coal Pty Ltd (BMC), a metallurgical coal mine operator in Queensland, Australia by mid-2022. We expect GEAR to have sufficient funds to finance its commitment of up to $300 million in the planned entitlement offer of ordinary shares by Stanmore to help fund the acquisition. However, additional funding support to Stanmore for the acquisition could weaken GEAR's liquidity and strain its B1 rating and stable outlook. Exhibit 1 Cash sources at GEAR will be adequate to meet planned uses through September 2022 0 100 200 300 400 500 600 Cash and cash equivalents as of 30 Jun 2021 Cash dividends from operating companies Other cash flows Equity commitment for Stanmore's entitlement offer Scheduled debt maturities Overheads Interest expense Cash surplus as of 30 Sep 2022 $ millions While GEAR has the right to subscribe up to its full pro-rata entitlement in Stanmore's planned ordinary shares offer, our projections assume GEAR spends $300 million, in line with its equity commitment for the offer. Sources: Moody's Financial Metrics™ and Moody’s Investors Service estimates