Cokal updates C. Kalimantan coal project
Monday, October 31 2016 - 10:28 AM WIB
EXPLORATION
BBM Project
BBM?s Production IUP covers an area of 14,980 hectares (ha), immediately adjacent to Indomet?s Juloi tenement, straddling the Barito River and has multiple seams of high quality metallurgical coal.
GEOLOGICAL and MINING ACTIVITY
As part of coal resources evaluation, on 30th of September Cokal announce the completion of a Scoping Study (?Study?) for a proposed underground mining operation of its 60% owned Bumi Barito Mineral Coal Project (?BBM? or ?the Project?), located in Central Kalimantan, Indonesia. This study is a part of 2016 updated coal resources report of the BBM Coal Project.
In April 2016, Cokal had reported a total Coal Resource of 266.6Mt of B, C, D and J Seams of which 19.5Mt was deemed Measured Resources and 23.1Mt was Indicated Resources in the PT BBM Coal Prospect. The Coal Resources of these seams can be economically extracted using open-pit mining and have been classified as both Measured and Indicated categories within four proposed open-pits designed in the BBM East Block.
As the remainder Inferred Coal Resources for Seams D and J are considered amenable to modern underground mining extraction methods, Cokal has compiled a Scoping Study report which outlines the concept and rationalization of a proposed underground mine plan for the East Block of BBM.
This Scoping Study report outlines the concept and rationalization of a proposed underground mine plan for the East Block of BBM.
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.
The seam height of the D Seam averages 1.5 to 1.4m while the J Seam varies from 1.25m to 1.3m 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 overall underground mining height variation is generally from 1.25m to 1.5m. These seam heights are similar to those extracted at the two highest performing Longwall plow operations in the world being, Bogdanka Mine in Poland and Pinnacle in the USA.
The Inferred Coal Resources in the underground mine area have been confirmed as primarily coking coal from analyses conducted in an Australian laboratory. These two seams are currently delineated by Inferred Resources totaling 67 million tonnes (mt) within the underground mining area in the eastern portion of the BBM project tenement.
In this study, the mine is proposed to use three continuous miner development units prior and a built- for-purpose longwall plow. Similar (but deeper) mining conditions using longwall plows include Bogdanka Mine (more than 5 million tonnes per annum (mtpa)) in Poland and Pinnacle (more than 2.5 mtpa) in the USA. The highwall punch mine configuration and shallow nature or the Inferred Resources means longwall output is not constrained by outbye coal clearance systems as is experienced in similar plow operations installed in existing older mines.
Sensitivity analysis indicates the underground extraction of premium quality coking coal at BBM could be highly competitive in the marketplace. The Scoping Study was conducted in accordance with the JORC Code (2012).
However, due to the restrictions imposed by the ASX on ?forward statements? including production targets, OPEX and CAPEX estimates and NPV valuations for Scoping Studies, Cokal is not able to provide any of these estimates in a public statement.
The outcome of this Scoping Study is the recommendation that the project be advanced through to a Pre-feasibility Study.
Cokal is preparing a submission regarding the BBM underground mining project to the Indonesian Government for its consideration in granting the maximum foreign ownership (70%) of BBM for the life of mine. The reduced divestment requirements were introduced by the Indonesian Government as an incentive to encourage the future development of underground coal development under GR 77 / 2014, enacted on the 14th of October 2014.
MINING ACTIVITY
A review of the Definitive Feasibility Study (DFS) was continued with regard to current fuel and steel prices in order to maintain relevance. The results of the review of the DFS is expected in the early part of the 4th Quarter 2016.
An analysis for small scale mining operation was continued as metallurgical coal pricing continues to increase.
ENVIRONMENTAL ACTIVITY
The wet season appears to have commenced earIy which has led to minimal burning off and haze in this region. This early, consistent rain has meant that our revegetationn is progressing very well with both cover crops and trees and is requiring minimal maintenance and replanting of any infertile or failed areas. BBM revegetation of areas affected by exploration activity is now 100% 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. Storage of waste material including waste oil, oil filters, mechanical parts and other industrial waste on site is at a very low level and complies with the maximum statutory holding period of waste on site at all times.
BBP Project
No exploration activity was conducted on BBP during this period.
AAM and AAK Projects AAM Project
Cokal completed the sale of its 75% interest in of PT Anugerah Alam Manuhing (?AMM?) for US$150,000 to PT. Prime Star Indonesia, 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. The Purchaser asked for a different corporate entity to be used to from that previously reported (PT Jinantra Karya Raya).
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. In September 2016, Cokal sold 75% of ownership in both PT Silangkop Nusa Raya (?SNR?) and PT Ketungau Nusa Raya (?KNR?) for US$120,000 to PT Prime Star Indonesia, an Indonesian company which previously acquired AAM. Cokal considered SNR and KNR as non-core tenements as they are located a considerable distance in West Kalimantan. The sale process is in progress.
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.
No breathing protection / dust masks were distributed during this period due to the limited ?burn-off? - and smoke hazard in our area of BBM.
Effort is now being expended into increasing nursery stocks both for the school planting programme and mine infrastructure replanting in the future.
APPROVAL AND EXTERNAL RELATION
BBM PRODUCTION APPROVAL ADVANCES ? UPDATE
Following the issue of the ?Ijin Pinjam Pakai Kawasan Hutan ? Operasi Produksi? (IPPKH_OP)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.
Following government instruction, a progress report on BBM?s IPPKH-OP obligations has been submitted to Ministry of Environment & Forestry Jakarta in week 4 of August 2016.
BBM WEST BLOCK EXPLORATION IPPKH EXTENSION
Since the issue of the Borrow to Use Permit ? Exploitation (IPPKH-OP) for the Eastern Block 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 Q4.
BBP PRODUCTION APPROVAL ADVANCES ? UPDATE
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)