Cokal Limited has released a JORC-compliant reserve statement for economic open pit coal in the eastern portion of the Bumi Barito Mineral (BBM) coal project in Indonesia. The total reserve estimate of 20.2 million tonnes of run-of-Mine (ROM) comprises 13 million tonnes of proven reserves and 7.2 million tonnes of probable reserves.

A total marketable reserve of 16.9 million tonnes (US$150/tonne for coking coal and $112.50/tonne for PCI coal) has been confirmed as metallurgical coal from analyses conducted in an Australian laboratory.

Economic analysis of BBM’s resources indicated that with additional drilling to convert inferred resources to indicated or measured resources, there is potential to delineate additional reserves.

Within the eastern portion reserve, the J Seam has 5.5 million tonnes of proven and 3.2 million tonnes of probable reserves and all of this is coking coal. Seams B, C and D have coking coal reserves comprising 3.0 million proven tonnes and 1.1 million probable tonnes, while there are 2.4 million proven tonnes and 1.7 million probable tonnes in PCI reserves.

Economic reserves were determined by using the definitive feasibility study (DFS), which was prepared in 2014 by Resindo and recently updated to reflect reduced fuel costs and depreciation of the Rupiah in November 2016.

Because of a change to the pit design for Pit 1 compared to the DFS, waste will need to be dumped onto land immediately east of the mining tenement outside the project area or else a road will need to be constructed through this area to allow waste to be dumped back in the project area.

Land compensation will need to be negotiated with the traditional owners for either of these solutions. It is common practice in Indonesia to seek to construct roads across land which is not owned by the mining company and to pay the traditional owners compensation for the use of this land. This is not considered to be a material issue.

Coal mined from the pits will be fed via a ROM hopper to a mobile rotary breaker located in the pit as close to the current mining operation as possible which will reduce the haulage distance for the handling of rejects from the rotary breaker. The overflow from the rotary breaker will be directed to a secondary dry screen which will further reduce the ash content of the product.

By the end of year 2 a coal processing plant based on a jig process will be constructed, which will accept the overflow from the secondary dry screen. This method is based on a design using a Batac jig provided by MBE (Germany) with an hourly capacity of 150 tonnes. The overall plant recovery is estimated at 87%.

Coal testing indicates no deleterious elements exist which would have a material impact on the marketability of the coal products.

Cokal director Pat Hanna said, “Although Cokal and its shareholders have had to endure a long period (over two years) of a global downturn in the coal industry, at last we can see the light at the end of the tunnel. Very soon now, Cokal will generate an income from sales of its valuable metallurgical coal and we are confident we can achieve a substantial profit margin.

“Consequently, Cokal is considering not to conclude the agreement for a JV partnership with IAA as announced on May 24, 2017. Development of the infrastructure for BBM Anak will form the basis of the infrastructure for the 500,000 tonnes per annum BBM PCI project as both projects will use the same barge loading port, stockpile and haul road. Upgrading BBM Anak to BBM PCI will cost substantially less than the initial estimates.

“Therefore, with the cash flow generated by BBM Anak, Cokal expects that it can develop the BBM PCI export project without third party funding.”

The company says that construction of the BBM Anak port is close to completion with barges scheduled to arrive at the start of this week. Production is scheduled to start in mid-August at a monthly rate of 10,000 tonnes of a premium low vol PCI.

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