Underground mining is growing as an option for Cokal Limited’s Bumi Barito Mineral (BBM) East coking coal block in Central Kalimantan, Indonesia. An updated scoping study has outlined that this would be the way forward for the block.
In its June quarterly report Cokal said the scoping study was substantially completed.
The report says that the inferred coal resources in East BBM for Seams D and J are considered amenable to modern underground mining extraction methods. The coal seams are generally thicker than 1 metre and the roof predominantly consists of very hard sandstone while the immediate 1-2 metres of roof consists generally of a competent siltstone.
It says that this combination is ideal for extraction of the deeper coal resources using underground methods such as thin-seam longwall mining.
The study has identified the potential for four large underground mining blocks using the longwall method of extraction of both the D and J seams.
The BBM Production IUP covers 14,980 hectares immediately adjacent to BHP Billiton’s Juloi tenement, straddling the Barito River. Earlier this year Cokal released an updated JORC resource statement showing 266.6 million tonnes comprising 90% coking coal and 10% PCI. This includes 19.5 million tonnes in the measured category, 23.1 million tonnes in the indicated category and 224 million tonnes in the inferred category.
Meantime, Cokal has reached an agreement for the conversion of all its outstanding loans of approximately US$15 million to a production royalty. On completion, the monies owing to Platinum Partners and Blumont will be fully discharged and Cokal will be loan free.
Agreement has been reached with Platinum Partners Value Arbitrage Fund, LP to convert loans owing by Cokal to various funds managed by Platinum or its affiliates. Those loans include the Blumont loan, which was acquired by the Platinum Group.
In consideration for restructuring of the debt, Platinum will be entitled to a royalty on coal sold from Cokal’s share of production from the BBM and PT Tambang Benua Alam Raya (TBAR) projects in Kalimantan.
The royalty will be 1% of the realised selling price (FOB) (ie selling price per tonne x tonnes sold x 1%) up to a maximum royalty amount of US$40 million. Cokal or its related parties will have the right to buy out the royalty at any time for the amount of US$40 million less amounts paid on the royalty at that time.
In a separate transaction and unrelated to Platinum, Cokal has made a private placement to Ramornie Capital and its associates. Funds raised will provide working capital for the company enabling it to continue to develop funding opportunities for its Indonesian projects.
The company will issue 75 million fully paid ordinary shares in Cokal, raising A$1.2 million.
Cokal executive chairman Peter Lynch said, “Since November 2015, the hard coking coal spot price has risen from US$74/tonne to the current price of US$95. This capital injection, the debt restructure and the recent upswing of coking coal pricing, presents Cokal with the ideal opportunity to move forward with developing its Indonesian coal projects.”