Cokal strengthens funding package for BBM coking coal project
Monday, February 9 2015 - 03:05 AM WIB
ASX-listed metallurgical coal group, Cokal Limited said that Cedrus International Limited (Cedrus) has joined with Platinum Partners (Platinum) to provide a nonbinding term sheet to Cokal in relation to a US$110 million project finance facility for the BBM coking coal project in Central Kalimantan.
Platinum and Cedrus will fund the project equally, Cokal said in a statement on Monday.
The Cedrus International Limited (?CIL?) team manages a global portfolio of proprietary direct investments in China, Southeast and Central Asia, Australia and Africa, primarily in the natural resources, commodities, cleantech and life sciences sectors.
?We welcome the participation of Cedrus, who together with Platinum Partners will provide Cokal with strong financial support from two global financing partners. The addition of Cedrus with their strong global and regional presence provides further support for Cokal's view of the merits of the BBM project and confidence in Indonesian mining opportunities generally,? said Cokal CEO and Chairman Peter Lynch.
The confirmation of the Platinum/Cedrus financing is a significant achievement for the company and, when completed, will put the company on target to start construction promptly after receiving the final forestry approval which is expected this quarter, he added
The total amount of the facility is US$110 million. This includes rolling the Platinum Bridging loan into the facility once it is in place.
The facility will be sufficient to fund construction and commissioning of Cokal?s 2 million-ton per annum Bumi Barito Mineral (BBM) Project and Cokal's general working capital requirements during this phase of development.
The key terms of the facility are:
- Syndicated facility of US$110M
- 13% interest rate
- 85 million options at an exercise price of A$0.13 and an 8 year exercise period
- Marketing fee of 2.5% of gross sales from coal produced and sold from the initial 2Mtpa phase of the BBM Project
- Royalty of 1.35% of gross sales from coal produced and sold from the whole BBM Project (the initial phase and subsequent expansions)
- Security customary for a major project financing in Indonesia.
- The loan term and repayment schedule is subject to negotiation
In addition to the above financing, Cokal as part of the 50:50 river Barging Joint Venture with a local Indonesian shipping company, Meratus Advance Maritime (MDM) which will be funded by equity from the joint venture participants and senior debt, Cokal plans to raise bank financing for its 50% share of the barging fleet senior debt (approximately US$15 million). The facility will provide the equity funding for Cokal?s share of the Barging Joint Venture.
Closing of the facility is conditional on satisfaction of various conditions, there being no material adverse changes, execution of definitive legal agreements reflecting the commercial terms, all project approvals being in place and other usual and customary terms for project financing in Indonesia for comparable projects. Accordingly, although the financiers and Cokal are committed to finalizing the funding, there remains completion risk.
BBM?s Production IUP covers an area of 14,980 hectares (ha), immediately adjacent to BHP Billiton?s Juloi tenement. The tenement covers ground which has been zoned as Production Forest. Production Forest zones are areas that have been designated by the Central Government of Indonesia to allow for forestry and mining activities by local and international companies.
The IUP straddles the Barito River and has numerous outcrops of bright coal. Coal core samples analysis confirmed BBM?s coal to be a premium coking coal with low ash, low sulphur and ultralow Phosphorus, as well as Crucible Swell Numbers (CSN) values generally 9.
The BBM project is estimated to have total coal resource of 266.6 million tons, comprised of 19.5Mt Measured, 23.1Mt Indicated and 224Mt Inferred Resources reported in accordance with the 2012 JORC Code.
Product split for the total BBM Coal Resource is estimated to be 90 perccent Coking Coal and 10 percent PCI.
Editing by Reiner Simanjuntak