Cokal Limited’s BBM Anak Coking Coal Mine in Kalimantan, Indonesia, is achieving anticipated operational performance. The company says maiden coal sales are imminent from BBM Anak, which is the first phase of the BBM asset.
Coal produced from the mine is being transported to stockpile at the nearby river port of Muara Teweh.
Cokal continues to improve facilities at the mine site, including drainage, sediment pits, haul road, stockpile areas and loading facilities. Ongoing improvement of the infrastructure is a key priority to ensure operational efficiencies and sustainability of mining activities.
The company is also focused on improving capacity at BBM Anak and is adding four dump trucks. These will be available on site by the third week of October. It has added more barges and increased barge loading capacity from 300 to 380 tonnes and from 500 to 580 tonnes as it gains experience and knowledge of the transport logistics and river operations.
These measures have resulted in significant savings in operational costs given the reduction in barging costs.
Cokal is establishing a local market for its premium PCI coal product and is in advanced negotiations with several local parties for the sale of the first stockpile of about 7000 tonnes.
Chairman Domenic Martino said, “Initially we would expect realised coal prices for the first few sales to receive a modest discount to international seaborne prices, due to local market conditions and as buyers become familiar with Cokal’s premium PCI coal properties, and test the coal’s applications.”
The company expects the price realised on future sales to increase significantly, particularly as it is in the process of obtaining an export licence enabling coal to be sold into international markets, including Japan and China, where discussions with key customers continue.
Domenic Martino has described the transition from an exploration company to a producer as a watershed moment. “With the successful operations and production from BBM, Cokal is very pleased that our strategic objectives have been validating, realising the dream of company founder, the late Peter Lynch, who is greatly missed.”
The company is also focusing on its next phase of growth and continues to advance development of the BBM PCI mining area. Site activities at BBM Anak have significantly contributed to development works of the PCI project.
“Once we get the BBM PCI project on line, production is expected to increase by 500,000 tonnes per annum and will be sold to overseas buyers,” Domenic Martino said.
Meantime, Cokal has entered into a convertible note agreement with New York-based MEF I, whereby it will raise up to A$4 million through the issue of notes in three tranches. Funds raised will be available for development of BBM PCI, general working capital and corporate purposes.
Directors believe that the notes represent an attractive funding solution for the company, minimising equity dilution for existing shareholders while it undertakes development of the BBM asset.