Cokal updates C. Kalimantan coal project
Friday, July 29 2016 - 06:28 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.
GEOLOGICAL ACTIVITY
As part of coal resources evaluation, a 2016 updated report of the BBM Underground Mining Project Central Kalimantan Indonesia Scoping Study in the BBM East Block is also substantially completed. This Scoping Study report outlines the concept and rationalization of a proposed underground mine plan for the East Block of BBM. The remainder Inferred Coal Resources in East BBM for Seams D and J are considered amenable to modern underground mining extraction methods. The coal seams are generally thicker than 1m and the roof predominantly consists of very hard sandstone (up to 95Megapascals (MPa)) while the immediate 1m to 2m of roof consists generally of a competent siltstone. This combination is ideal for extraction of the deeper Coal Resources using underground methods such as thin-seam long-wall mining. The Scoping Study has identified the potential for four (4) large underground mining blocks utilising the longwall method of extraction of both the ?D? and ?J? seams. Since the January 2015 Coal Resource Report, no further exploration activity was conducted in the field. The total Resource estimate (266.6Mt) remains unchanged comprising of 19.5 Million tonnes (Mt) Measured, 23.1 Mt Indicated and 224 Mt Inferred Coal Resources in accordance with the 2012 JORC Code. The Coal Resource has been confirmed as a metallurgical coal from analyses conducted in an Australian laboratory, and is comprised of 90% coking coal and 10% PCI coal.
This updated report demonstrates that after further review of the analytical results for Seams B, C and D outcrop samples, both coking coal and PCI are suitable for Direct-to-Ship extraction due to very low ash content of the three seams.
Due to the reliable representative sampling from the outcrop channel samples, the B, C and D Seams have displayed consistent low ash contents of between 2% and 7% with the average around 4%. This result isincontrast to the higher ash contents recorded inthe nearby borehole samples which are now considered to be most likely highly contaminated by the use of drill muds and non-coal material which collapsed in the borehole from above the seams. It is believed that this contamination resulted in the anomalously high ash results for the core samples.
It can be demonstrated that BBM can produce premium quality PCI and coking coals. The PCI product have low Ash (generally between 3% and 7%) as well as low Volatiles (generally below 10%). The high Calorific Value (7,500 to 8,200Kcal/Kg), together with the low Sulphur (0.4%) and ultra-low Phosphorus (0.005%), make this PCI coal a very attractive premium product inthe Asian PCI markets, particularly Vietnam.
Similarly, the majority (95%) of the coking coals in BBM have premium qualities including low Ash, low Sulphur and ultra-low Phosphorus. In the case of Seams B, C and D, the raw ash of the coal in situ ranges from 3% to 7% with a coke swelling index (CSN) of 9. The Volatiles are generally low (18% to 20%) which is ideal for most Asian steel producers, particularly in China.
The BBM Coal Resource includes Resources which have the potential to be economically extracted using both open pit and underground mining methods.
The coal seams are generally thicker than 1m and the roof predominantly consists of very hard sandstone (up to 95Megapascals (MPa)) while the immediate 1m to 2m of roof consists generally of a competent siltstone. This combination is ideal for extraction of the deeper Coal Resources using underground methods such as thin-seam longwall mining.
The Coal Resources for BBM have been estimated in accordance with the 2012 version of the JORC Code. The area covered by the current Coal Resource estimate is 30% of the total area of the BBM Production IUP tenement license.
MINING ACTIVITY
No mining activities were carried out during this Quarter. A review of the Definitive Feasibility Study (DFS) was conducted with regard to current fuel and steel prices in order to maintain relevance.
An analysis for small scale mining operation is under consideration as metallurgical coal pricing continues to increase.
ENVIRONMENTAL ACTIVITY
In order to maintain minimum expenditure while waiting construction and mining to commence in BBM, revegetation of almost 100% of areas affected by exploration activity is now complete. Over 15,000 seedlings have been planted along access roads and on drill sites, comprising of some 5,000 trees and some 10,000 ground cover. Approximately 2,000 trees have been distributed to local schools during this period to coincide with Earth Day Tree Planting pprogrammes on 20 April 2016.
Storage of waste material on site is at a very low level and complies with the maximum statutory holding period on site at all times.
BBP Project
No exploration activity was conducted on BBP during this period.
AAM and AAK Projects AAM Project
Cokal complete the sale of its 75% interest in of PT Anugerah Alam Manuhing (the? AMM?) for US$150,000 to PT. Jinantra Karya Raya, an Indonesian company which owns the tenements adjacent to AMM. Cokal considered AMM a non-core tenement located a considerable distance west of BBM and in different geological formation.
While it is believed PT AAM contains high Calorific Value (CV) thermal coal, there is less confidence of any discovery of a premium quality metallurgical coal, the core focus for Cokal. It was therefore considered appropriate in the current climate to realize the value of AAM, reduce ongoing liabilities and to use the funds for working capital while the Board pursue the funding options previously announced for BBM.
Cokal is considered by many as having extensive experience, built up over past five years, in working within the Indonesian mining regulatory process. This is evident as Cokal?s Bumi Barito Mineral Coal Project (?BBM?) is one of the few mining project to be issued a new Production Forestry Borrow and Use Permit (IPPKH) approval since the new process was announced by the Indonesian Government on the 26th of January 2015. Consequently, PT. Jinantra Karya Raya has employed Cokal to provide non?exclusive consulting services on a retainer basis. The retainer is for US$400,000 and expired on 12 June 2016.
AAK Project
Cokal has a 75% share of Anugerah Alam Katingan (AAK) projects also located in Central, Kalimantan, Indonesia. The AAK project area comprises of 5,000ha.
Applications for the Exploration Forestry Permit (IPPKH) and Clean and Clear Certificates continue to be processed.
Following official handover letter (dated 12 January 2016), AAK IUP is currently on ?on-hold? status by Provincial Police Department (Polda Kalteng). It is being decided by police following their investigations re ?AAK ownership dispute? issues. Cokal is an aggrieved party and will await the outcome of the Police investigation into a period predating Cokal?s interest in the Project.
SNR and KNR Project
Applications for the Exploration Forestry Permit (IPPKH) and Clean and Clear Certificate continue to be processed.
PROJECT DEVELOPMENT
MANNING
Further reduction in staff and employee numbers have been made to limit expenditure. All redundancy
and reduction requirements have been conducted in accordance with Indonesian labour regulations and Cokal has been assisted in this process with substantial help from both local and provincial labour departments in order to ensure total compliance.
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. Areas of ground cover and trees that were peviously described as becoming ?distressed? due to the extended dry season are flourishing and highly viable due to a normal high rainfall wet season experienced fom late 2015 to the present. We are expecting a dry season but with no significant effect to our previous planting as all trees and ground cover is well established.
BBM is in conjunction with the Regency is becoming involved in the continuing education of local stakeholders regarding extensive forest burning for crop planting.
Preparations are being made however for the supply of dust masks for ?at ? risk? portion of the community.
Effort is now being expended into increasing nursery stocks both for the school planting programme and mine infrastructure replanting in the future.
There have been a small number of environmental damage by both illegal loggers and miners. These activities have been documented and officially reported to Provincial Mine Inspector who is currently carrying out investigations. BBM has also carried out a number of community counselling session describing the damage and future impacts in lay man?s terms which have been well received.
APPROVAL AND EXTERNAL RELATION
BBM PRODUCTION APPROVAL ADVANCES ? UPDATE
Following the issue of the ?Ijin Pinjam Pakai Kawasan Hutan ? Operasi Produksi? or ?Borrow To Use Forestry Permit ? Operation Production? which allows BBM to start construction and mining BBM has commenced activities associated with the compulsory rehabilitation of an area of damaged forest near the BBM minesite. These activities include community review and discussion with regard to rehabilitation and formulation of a rehabilitation budget and programme.This activity is a pre- requirement for the issue of the ?Borrow to Use Permit?. The other main obligation for BBM IPPKH ? OP is the assessment of the non taxable payment for actual use of forest area.
BBM WEST BLOCK EXPLORATION IPPKH EXTENSION
Since the issue of the Borrow to Use Permit ? Exploitation (IPPKH-OP) Cokal has proceeded with the application for a Borrow to Use Permit ? Exploration for the Western Block of BBM and this application is currently with Planology Dept. at the Ministry of Environment and Forestry. Further follow up on status will be made during Q3.
BBP PRODUCTION APPROVAL ADVANCES ? UPDATE
The IUP production / operation (Mining Lease) licence has been signed by the Murung Raya Bupati and forwarded to the Provincial Mines Department for issue. This is part of the process whereby IUP?s throughout Indonesia are being centralised to the Provincial Mines Departments. We are expecting the issue of the IUP Operation in Q3 2016. There is a slight delay due to the relinquishment of authority and responsibility from Regency level to Provincial level. This process is expected to be totally completed by Q4 2016.
Cokal has submitted its application for the Clean and Clear Certificate Exploration from the Director General of the National Mines & Energy 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. (end of excerpt)