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Cokal www.cokal.com.au/

Cokal (ASX:CKA) is an emerging coal company, with high margin metallurgical coal as the key commodity and focus on four projects in Kalimantan, Indonesia.

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Cokal Limited on the road to coking coal production in Indonesia

Cokal (ASX: CKA) has been granted a production mining lease for its 60%-owned Bumi Barito Mineral (BBM) Project in Indonesia placing the company firmly on track to begin construction before the end of the year.

The company is targeting the start of production in the first half of CY2014 and receipt of the production mining lease completes the mining approvals required for BBM production.

The production mining lease covers 15,000 hectares – the maximum coal lease area allowable, and the full development of the Eastern Block of BBM to 6 million tonnes per annum.

The lease, which has an initial period of 20 years with two 10 year extensions permitted, also allows for exploration on the remaining area.

All protected and moratorium forest areas are excluded from the production mining lease area, with Cokal now focused on upgrading the forestry exploration permit to a production permit.

This is scheduled to be completed by the end of the September quarter and is the final major approval required to begin construction of the project.

Cokal plans to barge coal down the Barito River and to deliver a premium coking coal to the nearby Asian steel markets.

Coking coal from the BBM Project is expected to be a low ash, low sulphur, ultra-low phosphorus product with a coking swell index of 9.

These attributes make this product a well sought after commodity in Asian steelworks, which need this coal to blend down the high impurities of other coking coal supplies.

Cokal will develop the project in two stages, starting with an initial 2 million tonne per annum direct ship operation, expanding up to 6 million tonnes per annum at a later stage.

The Pre-Feasibility Study has highlighted the potential of BBM to be developed as a low capital cost, low operating cost metallurgical coal project.

Work is currently underway on a number of key final feasibility areas for the project which are expected to be completed by the end of the September quarter.


Project funding

Cokal has identified a number of financing options for stage one including debt financing, pre-sale of product type agreements and the sale of a portion of the project to an industry partner.

The company’s preferred funding mechanism is direct investment and offtake funding direct into the BBM Project.


BBM Project

The BBM Project lies adjacent to BHP Billiton’s (ASX: BHP) Indomet Coal Juloi Project in the Regency of Murung Raya.

The project is situated in the prospective metallurgical Upper Barito Coal Basin and hosts a Resource of 77 million tonnes in four seams, comprising 70 million tonnes in the Inferred category and 7 million tonnes in the higher confidence Indicated category.

Cokal has also outline an exploration target of 200 to 350 million tonnes in 13 seams within the Eastern Block, which makes up about 40% of the BBM Project area.

The company is well-funded with around A$11.3 million in cash at the end of March 2013.


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