Sino Prosper, a Hong Kong-listed company that focuses on energy and natural resources exploitation, expressed hope that its plant in Indonesia would start producing bitumen and other by-products in the fourth quarter of 2007.

"Our bitumen project in Buton Island, Indonesia has been going on smoothly and it is expected to commence full operation in November, 2007," said Sino Prosper's CEO Tang Yantian.

Tang also announced yesterday a breakthrough in its bitumen extraction technique.

"With the new bitumen extraction technique in place, the whole bitumen extraction process can be shortened to 20 minutes from 30 minutes while the size of the needed equipment can be largely reduced, which means that the extraction can be done at a much lower cost," Tang said.

"It (a much lower production costs) will therefore help us further expand our profit margin in the future," he added.

Declining to disclose how much lower the latest bitumen extraction costs could be, Tang told reporters yesterday that current bitumen extraction costs were between US$80 and US$120 per ton, against US$500 per ton and US$300 per ton of ex-factory prices for bitumen and heavy oil.

Sino Prosper now owns exploitation right of five blocks covering 24,253 hectares in Buton Island in Indonesia's southeast Sulawesi province, where the world's biggest reserves of natural asphalt, the raw material for bitumen and its by-products such as heavy oil and asphalt modifier, were found.

The company recently found in a 1,150-hectare site in Block 4 an estimated 36 million tons of asphalt rocks. Tang, however, said, his company would "find much more asphalt rocks in the near future".

"We will soon expand our exploration by 2,000 to 3,000 hectares and we aim to find at least 100 million tons of asphalt rocks after the exploration," he said.

Tang was upbeat about the future development of his company's project in Buton Island.

"With a crude oil price of US$40 or US$50 per barrel, our EBITDA for the first full year's operation will reach US$154.6 million or US$203.1 million respectively," Tang said. "If the crude oil price jumps up to US$70 per barrel, our EBITDA will amount to US$300 million."

"Our earnings from 36 million tons of asphalt rocks alone will allow us to operate normally in Buton for as long as seven to eight years," Tang added.

With an investment of US$50 million in the first phase of the project, Sino Prosper hopes to see its Buton Island plant produce at least 1.2 million tons of heavy oil and 50,000 tons of bitumen modifier per year later.

Tang also said Sino Prosper's acquisition of an ethanol production factory in Thailand went off smoothly as planned.

"We hope to complete the acquisition of Picnic Ethanol, an ethanol production factory in Bangkok's suburbs not later than September 30," he said.

With phase one of the production put into full operation later, Sino Prosper's to-be subsidiary in Bangkok is expected to produce 250,000 litres of ethanol per day.

"We expect Picnic Ethanol to generate a gross profit of about HK$187.5 million per year later," Tang said.

Using cassava instead of corn to produce ethanol, Picnic Ethanol's production costs remain within 3,000 yuan to 3,500 yuan per ton, about 1,500 yuan to 2,000 yuan lower per ton than most of its Chinese counterparts who are still using corn to make ethanol.

Despite its promising future, Sino Prosper saw its shares fall by 1.31 per cent to close at HK$0.75 yesterday.

(HK Edition 08/16/2006 page3)