Orpheus Energy is increasing coal sales from its Indonesia operations as production increases and the availability of barge loading slots improves. The company achieved sales of around 59,000 tonnes in the current quarter to June 5, comprising 42,000 tonnes in April and May and another 17,000 tonnes in the first week of June.
April sales totalled 20,612 tonnes and May sales 21,314 tonnes. The coal has been sold to a variety of buyers including domestic utilities and Indonesian trading groups. Orpheus anticipates achieving a material increase in coal sales for June when compared with the preceding two months.
Coal prices remain steady and margins tight, however, Orpheus continues to focus on reducing costs to maximize the return for its coal sales, particularly as production continues to ramp up over the coming months.
Competition for loading slots has been fierce over the last five months as producers and traders race to move their inventories and outbid each other to secure loading slots. This has seen the typical barge loading cost move from about Aus$6 per tonne at the start of 2013 to anywhere up to about Aus$9 per tonne in early June. Often this inflated barge loading cost has resulted in coal being sold by other producers at a loss, as the increased cost erodes the already slim margins.
The company has a strategic objective to develop and acquire its own infrastructure facilities to service its existing and future projects, and is negotiating loading slots at alternative ports.
In addition, advanced discussions are under way regarding other port opportunities in South Kalimantan that will facilitate Orpheus managing its entire coal chain from mine mouth to end buyer. This is being pursued through the management and equity participation in existing port infrastructure. It is anticipated that this will become a key component of Orpheus’s overall business, particularly as the current available margins on coal loading are superior to that of coal mining.
Meanwhile, a drilling program is about to start on Orpheus’s 51%-owned B4 project, where an exploration target of 5-10 million tonnes for both blocks and coal sample assays of over 8000 Kcal/kg have previously been announced. The aim of this 10-hole program to a nominal depth of 100 metres is to achieve an initial JORC-compliant resource and is expected to be completed by mid-July.
Following the early successful discovery of a 1 metre thick coal seam in March 2013 in the first of Orpheus’s four Papuan tenements, exploration has continued. This coal outcrop is in the mid reaches of the Watoa River in the northern part of the PT Daya Mega Pelita tenement and subsequently, a second traverse in April located a coal outcrop in the head waters of the Epawa River in the northeast of the southern portion of the concession. This coal seam is separate to the initial discovery but possesses similar qualities.
In May, a third greenfields exploration traverse went up the Amewa River from a west to east direction, across the midsection of the southern portion of the concession and also found two additional coal outcrops in the Budewa River area, just north of, and flowing into the Amewa River.
Orpheus is excited about these outcrop discoveries as they are unrelated, indicating the potential existence of multi seam coal outcrops which are hidden. Further follow up work in this concession is ongoing and Orpheus’s other three Papuan tenements will also soon be the subject of targeted exploration.