Cokal Limited has secured funding for development of the BBM PCI coal mine at its 60%-owned Bumi Barito Mineral (BBM) Coal Project in Central Kalimantan, Indonesia. The BBM PCI project area is separate from the flagship BBM Coking Coal development project, which is the subject of a definitive feasibility study.
The company has executed an agreement to raise A$10 million in funding for the development of BBM PCI via a Limited Joint Venture with Investment Advisor Alliance (IAA). IAA is an affiliate of, and is supported by, Beacon Financial Group Pty Ltd.
Beacon has told Cokal that it is excited to be affiliated with this opportunity and has considerable access to capital with approximately A$3.5 billion in funds under management.
Under the agreement, IAA will fund A$10 million in project capital expenditure at BBM PCI in return for 50% of Cokals share of profits from operations. The agreement is binding on IAA and Cokal but conditional on completion of a joint venture agreement and regulatory approval.
The agreement is for life-of-mine production from the BBM PCI project, limited to coal with volatile matter of less than 12%.
Cokal has commenced preparation for construction of BBM PCI, which has been designed to produce premium Ultra Low Volatility PCI coal (ULV PCI).
Initial site preparations include location of a suitable barge-loading port in close proximity to the mining operation, as well as selection of a mining contractor and a barging contractor.
Cokal says the agreement means that BBM PCI project development is fully funded to first coal production. It will also result in an accelerated development timeline, with first production targeted for quarter 4 of 2017 and will enable the company to take advantage of the attractive prices being received for premium ULV PCI.
The agreement also recognises the significant longer-term potential of the project.
The ASX-listed company says that access to cashflow from BBM PCI will assist it to fund development activities at the BBM Coking Coal project and that BBM PCI will not impede the development pathway for BBM.