AN update of the 2014 definitive feasibility study (DFS) for Cokal Limited’s Bumi Barito Minerals (BBM) Coking Coal Project in Central Kalimantan has revealed significant reductions in capital and operating costs. Together with the increase in coking coal prices and its proximity to growing Asian markets, Cokal says BBM has become a more attractive opportunity.
The base DFS was completed in 2014 and since that time Cokal has continued to complete a number of engineering studies and reviews such as geotechnical and hydrology, and contractor negotiations. These resulted in some scope changes and costing refinements, none of which materially impacted the base estimate but did improve the accuracy of the estimate.
The two key factors affecting costs which have changed from the base DFS are the FOREX US Dollar to Indonesian Rupiah forecast and fluctuations in the price of fuel.
The DFS update has continued to show that the BBM coal mine and associated transport system can be developed as a low capital cost operation with moderate to medium range operating cost.
The update maintained the development as a 2 million tonnes per annum open cut mining operation over 10 years. BBM’s relatively low ash, low volatile, low sulphur, ultralow phosphorus coking coal would command a high value as a blending feed in the premium coking coal market.
Capital cost has fallen by 10.3% to US$68 million while the already low cash operating cost, excluding royalties of 7%, unit rates have fallen 15.5%. The initial start-up capital has decreased from US$50 million to $47 million and after start-up enhancement capital from US$25 million to $21 million.
Meantime, Cokal is continuing discussions in relation to documenting the agreed conversion of the Platinum loans to a production royalty. In early April Cokal was awaiting the next version of the agreement from the Liquidator of the Platinum Partners Value Arbitrage Fund and the Receiver of the Platinum Partners Credit Opportunities Master Fund. Cokal said that it anticipated that the agreement could be completed and executed by both parties before the end of April.
The company’s directors provided some financial assistance pending finalisation of the debt conversion agreement to meet working capital requirements. In a statement the company said completion of the debt conversion agreement was necessary prior to completing arrangements to fund the BBM project.