Cokal seeks to upgrade DFS for BBM coking coal project
Tuesday, October 4 2016 - 02:54 PM WIB
ASX-listed Cokal Limited said that it has engaged consultancy firm PT Resindo Resources (Resindo) to update the Definitive Feasibility Study (DFS) for PT Bumi Barito Minerals (BBM) coking coal project in Central Kalimantan. Resindo completed the original DFS in 2014.
Recently, the cost of construction materials, power and fuel, have reduced significantly as the price of commodities reduced, particularly for thermal coal. This reduction in costs has also translated to reductions in contract mining rates which has been compounded by the downturn in thermal coal mining activity in Indonesia. Contractors are offering competitive mining rates in order to win the few projects that are surviving through downturn in the thermal coal industry.
Cokal said in a statement on Tuesday it has engaged Resindo to update the DFS using current costs and pricing to determine savings in CAPEX and OPEX.
The company said that with the spot price of coking coal reaching US$208/ton in recent days, it is expected that the quarterly contract benchmark pricing for premium coking coal will settle well at a price short of the current spot market but much higher than the previous quarterly benchmark. As a consequence, it is expected that the long-term brokers consensus pricing for coking coal will be revised upwards once the negotiations have been completed.
Cokal Chairman Peter Lynch said: ?This is exciting times in our industry as our expectations for a recovery of coking coal pricing have been exceeded by far. It is no doubt that recent events will greatly improve the value of BBM and its attractiveness to investors looking to enter the coking coal market via a project which has all its approvals ready in place to commence construction.
Editing by Reiner Simanjuntak