Cokal updates C. Kalimantan coal project
Friday, May 1 2015 - 02:35 AM WIB
EXPLORATION
BBM Project
BBM?s Production IUP covers an area of 14,980 hectares (ha), immediately adjacent to BHP Billiton?s Juloi tenement, straddling the Barito River and has multiple seams of high quality metallurgical coal.
Highlights
- Completed update of detailed geological model evaluation of all coal seams defined in East Block BBM Concession Area.
- Completed Estimation of Coal Resource Report Update of East Block BBM Concession Area in accordance with the 2012 JORC Code.
GEOLOGICAL MODEL UPDATE
Since 2011, Cokal has conducted a comprehensive coal exploration program including an extensive Lidar topographic survey accurate +/-0.1m coordinates and +/-0.5m elevation, detail geological outcrop mapping, an exploration drilling programme, geophysical borehole survey, coordinate borehole survey and analytical testing of coal samples acquired from boreholes and outcrops. The detailed exploration activities were focused on the Eastern portion of BBM, east of the Barito River and were conducted to a level of standard which complies with international best practice in exploration procedures.
Based on the geological data acquired recently from outcrop channel sampling of the coal seams, Cokal?s geologists have updated the detailed geological model incorporating the structural and analytical interpretation of the East Block of BBM.
The geological data and model evaluations comply with the requirements of the 2012 JORC Code, According to the down-hole geophysical logs and seam outcrop mapping, Cokal has readily correlated nine (9) coal seams throughout the eastern part of project area which have identified alphabetically starting from Seam A at the base of the stratigraphy, up to Seam J.
The seams range in thickness from 0.2 to 2.55m and typically consist of bright coal occasionally interlaminated with a carbonaceous mudstone parting. The coal itself is often described as ?bright? or ?bright with minor dull bands? due to its high vitrinite content. The coal is soft (generally with HGI >90) and easily broken. The interburden thicknesses between the coal seams in a single horizon generally vary from 1.5m to 18m. The seams dip to the south and southwest, ranging from 5 to 15 degrees.
Three seams in the lower part of the sequence, B, C and D, are grouped close together to form about 3.5m of coal in an 8m section. This section is considered to be particularly economically favourable for open pit mining.
Seam J is the uppermost seam of the stratigraphic sequence in the east portion of the BBM tenement. Seam J occurs about 260-280m stratigraphically above Seam D. While B, C and D seams comprise primarily of coking coal and some PCI/Anthracitic products, the Seam J, which has the potential to provide a significant portion of open pit mineable coal, comprises of a potential premium coking coal product throughout its occurrence in the East Block of BBM.
Based on the extensive exploration drilling and mapping program, Cokal could not find any evidence of the igneous intrusions in BBM East Block. The exploration results did confirm the a few major structural discontinuities tending northwest-southeast and that these features are considered to have minimal impact on mining.
RESOURCE UPGRADE
In December 2013, Cokal had reported a total Coal Resource of 261Mt of B, C, D and J Seams of which 10.5Mt was deemed Measured Resources and 13.5Mt was Indicated Resources in the PT BBM Coal Prospect.
Following that report, the exploration activities have been continuing with the main objective to upgrade the Resource of Seams B, C and D to both Measured and Indicated categories within Pits 1 and 2 areas in the BBM East Block. As a result of the additional detail geological data from the surface mapping in Pits 1 and 2 at BBM East Block, Cokal has completed an updated detailed geological model and Coal Resource report.
Cokal has prepared an updated report of the estimation of the Coal Resources in the BBM East Block. The evaluation of B, C, D and J seams provides an objective assessment of the Coal Resources in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (JORC Code), 2012, which is used for the reporting of Mineral (Coal) Resource estimations to the ASX.
Based on the data collected from main exploration field activities, including detailed coal outcrops surface mapping, shallow drilling and deep drilling across the BBM East area and with a minimum seam thickness cut-off of 0.3m, a total Coal Resource of 266.6Mt of B, C, D and J seams have been estimated in accordance with the JORC Code. Of that, 19.5Mt is deemed Measured Resources and 23.1Mt is Indicated Resources.
The upgraded Resource to higher JORC categories is primarily due to the additional outcrop mapping and subsequent channel sampling of the coal for Seams B, C and D in the areas covering Pits 1 and 2 in BBM East. These channel samples gave a reliable representative sample of each coal seam.
BBM Coal Resources by Category and Seam
| Seam Name Seam | Thickness (m) | Measured Resources (Mt) | Indicated Resources (Mt) | Inferred Resources (Mt) | Total Resources (Mt) |
| J | 1.33 | 10.50 | 13.5 | 31 | 55.00 |
| D | 1.34 | 3.53 | 3.5 | 70 | 77.03 |
| C | 1.23 | 2.62 | 3.1 | 66 | 71.72 |
| B | 1.10 | 2.85 | 3.0 | 57 | 62.85 |
| Total | 19.50 | 23.1 | 224 | 266.6 |
The BBM Coal Resource includes Resources which have the potential to be economically extracted using both open pit and underground mining methods.
The area covered by the current Coal Resource estimate is 30% of the total area of the BBM Production IUP tenement license.
BBP Project
No exploration activity was conducted on BBP during this period as all drilling and exploration resources have been deployed to BBM to assist in the delineation of the coal seam in the KLM area.
AAM and AAK Projects
Cokal has a 75% share of Anugerah Alam Katingan (AAK) and Anugerah Alam Manuhing (AAM) projects also located in Central, Kalimantan, Indonesia. The AAK project area comprises of 5,000ha and the AAM project comprises of 10,000ha. Applications for the Exploration Forestry Permit (IPPKH) and Clean and Clear Certificates continue to be processed.
SNR Project
Applications for the Exploration Forestry Permit (IPPKH) and Clean and Clear Certificate continue to be processed.
PROJECT DEVELOPMENT
EARLY WORKS DETAILED ENGINEERING & CONTRACUAL DOCUMENTATION
Work has been completed to detailed design and quotation stage on a number of critical path construction items. By completing these items the project construction can commence as soon as the full funding package is available.
These items include;
? Plotting and survey of road corridor from the Barito River to BBM being carried out, 100% complete. The centreline of the road corridor has been established and control survey marks established for earthworks cut and fill control
? Additional geotechnical investigation for port, stockpile and bridge locations.
? Purnama Port land mapping completed
? Engineering design optimised and re-quoted
? Detailed river bottom and channel survey work completed for the load out port at Purnama and surrounding areas
BBM DEFINITIVE FEASIBILITY
Further costing, delivery confirmation and price enquiries were carried out during the Quarter in order to confirm both the BBM Definitive Feasibility Study and consequent changes associated with the Detailed Engineering works carried out during the Quarter
ENVIRONMENTAL REHABILITATION
Cokal continued last quarter to undertake environmental monitoring on site as part of ongoing baseline studies. Rehabilitation activities have been substantially completed throughout the previously disturbed exploration areas with both ground cover and trees flourishing in the wet weather experienced during the quarter.
Effort is now being expended into increasing nursery stocks both for the school planting programme and mine and mine infrastructure replanting in the future.
APPROVALS & EXTERNAL RELATIONS
BBM PRODUCTION APPROVAL ADVANCES ? UPDATE
As reported previously Cokal received the Izin Prinsip Izin Pinjam Pakai Kawasan Hutan or ?InPrincipal Forestry Permit? for its BBM Project. The In-Principle Forestry Permit is the last stage prior to the issuance of the ?Borrow and Use of Forest Area Permit (Izin Pinjam Pakai Kawasan Hutan (?IPPKH?)) which allows the Company to start construction and mining.
The In-Principal Forestry Permit has been issued for an area covering 1,242 ha which enables the development of the port, haul road and the initial development of the mine site once the conditions of the In-Principal Forestry Permit are met.
Cokal has fulfilled all of the administrative obligations necessary to obtain the full IPPKH. The fully completed IPPKH application was submitted the BKPM, which acts as the new one-stop integrated service (PTSP) to simplify investment licensing procedures. However due to the technical nature of the IPPKH application and that BBM?s application is the first to be received under the new system the BKPM has referred the application to the Forestry Dept for detailed assessment.
The Forestry Dept assessment is expected to be completed early Q2 and then will be returned to BKPM for final approval.
ISSUE OF BBM PORT CONSTRUCTION & OPERATION APPROVAL
Bumi Barito Mineral (BBM) Project port facilities have received both Construction and Operation Approval. The Department of Transport has issued the port permit - the Izin Konstruksi dan Operasi Terminal Khusus. The port facilities are located in, and on land adjacent to the Barito River, in Murung Raya Regency, Central Kalimantan.
The Construction and Operation Approval is for an initial 15 year period comprising a five year construction window and a ten year operational period. Cokal expects that the 2 Million tonnes per annum (Mtpa) operation will require a 12 month construction period, leaving a 14 year operational period under the Construction and Operation Approval. The approval also provides for BBM to obtain future extensions to the operational period to support activities beyond the initial 15 year period.
The port location approval is for an area of approximately 150 ha and includes the 37 ha port area currently being approved in the Forestry Permit process. The area approved for the port includes the land necessary for the initial 2 Mtpa capacity scenario as identified in the BBM Definitive Feasibility Study, in addition to the area necessary for the expansion up to the 6 Mtpa capacity scenario. It is estimated that there will be an access of approximately 110 ha in the approved port area which will allow for future design optimization and expansion opportunities beyond the 6 Mtpa capacity scenario.
BBM FOREST INVENTORY SURVEYS
BBM has previously concluded the forest inventory surveys for the Port and Haul Road IPPKH areas. The inventory surveys for the initial mine development area will be completed in Q2 2015 following the issue of the full IPPKH. The data collected during the forest inventory surveys will be used to establish the various Government taxes payable by Cokal for activities in Production Forest areas.
BBM WEST BLOCK EXPLORATION IPPKH EXTENSION
In order not to ?mix? the current IPPKH Operation application with a further IPPKH ? Exploration application this application has been put on hold until directly after the issuance of the IPPKH ? Operation for BBM
BBP PRODUCTION APPROVAL ADVANCES ? UPDATE
The IUP production / operation (Mining Lease) licence is still with the Murung Raya Bupati for signing. Whilst expected to be issued during this quarter it is now expected to be issued in Quarter 2 2015. Cokal has submitted its application for the Clean and Clear Certificate Exploration from the Director General of the National Mines Department formalising the previous award of Clean and Clear status.
TBAR EXPLORATION FORESTRY PERMIT
Cokal continued during the last quarter to progress the Exploration Forestry Permit for TBAR with the Central Kalimantan Provincial Government. Site visits by the Provincial Government were expected to occur during Quarter 1 2015 and the issue of the Provincial Government technical recommendation expected early Quarter 2 2015. Due to Cokal?s focus on fulfilling the administrative requirements to obtaining the IPPKH for BBM, together with workloads within the Provincial Forestry Department the site visit to the TBAR concession has been delayed until Q2 2015.
CORPORATE
BBM STRENGTHENS PROJECT FUNDING PACKAGE FOR BBM
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 (Facility) for the BBM project.
Platinum and Cedrus will fund the Project equally The total amount of the facility is US$110M.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 Mtpa 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$15M). The facility will provide the equity funding for Cokal?s share of the Barging Joint Venture. (end of excerpt)