Cokal updates C. Kalimantan coal project
Tuesday, January 31 2017 - 10:32 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.
TBAR Project
TBAR?s Exploration IUP (No.188.45/204/2012) covers an area of 18,850 hectares (ha), immediately adjacent to the south of BBM?s tenement. TBAR?s IUP (tenement license) is on the Clean and Clear List (CNC) with over 80% of the lease being either production or limited production forestry lease, that is, it is available for exploration subject to the issuance of an exploration forestry permit. The application of exploration forestry permit was submited in 2014 and is continues to be processed by the Environment and Forestry Ministry of Indonesia.
Currently Cokal is preparing technical documents in support of an aplication for the Exploration IUPlicense to be upgraded to a Production and Operation IUP (equivalent to a mining license). The technical documents include an exploration report, mine scoping study and an environment impact analysis report.
GEOLOGICAL ACTIVITY
? Cokal is preparing technical support documents for the TBAR project upgrade the Exploration IUP to a Production and Operation IUP.
? The technical evaluation on TBAR project is based on datafrom the 69 coal outcrops mapped, which indicates a coal seam thickness ranging from 0.15m up to 1.90m.
? The coal outcrops in TBAR project indicates the potential for a much larger shallow open cut coal resource of lower strip ratio than that delineated in the BBM project to date.
The TBAR coking coal project lies to the southeast of the BBM tenement. The proposed haul road from BBM to the barge loading port passes through the TBAR tenement.
Cokal?s exploration mapping program to date has defined significant coal potential across the entire tenement of the TBAR coking coal project.
Based on the data collected from these activities, 69 coal outcrops ranging from 0.15m to 1.90m have been identified. The coal seams in TBAR have been identified as the B, C, D and J seams which were delineated in the adjacent BBM coking coal project. The J Seam coal outcrop was mapped along 13km of strike length, while the B, C and D Seams were mapped along 16km of strike length. The outcrop strike lengths are interpreted to be more extensive than that at BBM and indicate the potential for a much larger resource of shallow open cut coking coal in TBAR than that delineated at BBM to date.
Based on the digital topographic data of TBAR, which has been sourced from a high-resolution Light Detection and Ranging (LIDAR) survey, the physiography of the TBAR tenement comprises of flat or undulating ground to the southwest, and steeply rugged hills in the remaining areas.
Cokal has been conducting the geological survey mapping of the TBAR Coal Project since May 2013. Detail mapping has been conducted in the central, northern and eastern parts of the lease.
The objective of the surface mapping was to observe the dips and strikes of coal and non-coal outcrops of the Haloq Sandstone in order to delineate the regional structural setting and the existence of nearsurface coal occurrences, and to correlate coal seam outcrops with that of the stratigraphic sequence delineated in the adjacent BBM tenement.
A large number of occurrences of coal seams were identified and found to be of variable thickness. Generally the coal outcrops were found to be composed of bright coal bands, with minor thin carbonaceous mudstones and shale partings. The outcrops were observed in creeks and valleys throughout the TBAR tenement.
From the mapping completed to date, a total of 69 coal outcrops have been identified in the central, northern and western parts of TBAR. This abundance of coal outcrops indicates that TBAR has the potential to contain a large exploration target of coal in the Haloq Sandstone Formation which is considered to consist primarily of metallurgical grade coal.
The structural setting of the area is characterized by E-W to NE-SW bedding, dipping to the north and east-northeast respectively.
Borehole data in the eastern part of BBM, close to TBAR, indicates that there are at least nine (9) coal seams in the BBM project area. These seams are readily correlated from boreholes throughout the eastern part of the BBM tenement area and have been identified alphabetically starting from Seam A at the base of the stratigraphy, up to Seam J.
The distribution of outcrop data in TBAR indicates that there are between four to 10 significant coal seam layers with thickness ranging from 0.2 M to 1.9m.
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.
From the outcrop mapping in TBAR and the structural geology delineated in BBM from exploration drilling, it is interpreted that the coal seams in TBAR form a synclinal feature such that the same coal seams outcrop in the south-eastern part of BBM. The axis of the syncline is essentially east-west.
It is also interpreted that the Sintang Intrusive may occur within the TBAR project area.
Thirty-five (35) coal samples were recovered from outcrop and sealed in plastic sample bags. The samples were analysed in a local coal laboratory whilst ten (10) check samples were also analysed at the ALS Coal Laboratory in Brisbane, Australia. The results from ALS confirmed that the analyses from the local laboratory were consistent with the standards used in certified Australian laboratories.
Although the outcrop samples were oxidized thus giving a range of Swelling Index (CSN) from 0 to 9, the fact that the Volatile Matter content ranges from 17% to 22%, indicates the coal in TBAR is consistent with that of the coking properties of the coals in BBM.
From outcrop analysis to date, it is expected that all coal found in the TBAR project area will be primarily coking coal. A summary of the in-situ coal quality results indicate generally the coal has minimum impurities including low-medium ash, low sulphur and ultra-low phosphorus as well as possessing very favourable metallurgical attributes sort after by steel makers in many countries.
The TBAR coal deposit comprises of multiple coal seams with long strike lengths (more than 15 kms) and which have the potential to be economically extracted using both open pit and underground mining methods.
The strata in TBAR appears to be very similar to the adjacent BBM deposit where the coal seams are generally thicker than 1m and the roof predominantly consists of very hard sandstone (up to 95MPa) while the immediate 1m to 2m of roof consists generally of a competent siltstone.
This condition is ideal for extraction of the deeper coal resources using underground methods such as thin seam longwall mining.
Further mapping is likely to improve the potential of the coal resources in the TBAR Coal Project. It is expected that a comprehensive drilling exploration program will define a significant coal resource in TBAR in accordance with the JORC Code, as was achieved in the adjacent BBM project.
Cokal is confident it can develop a low cost metallurgical coal project in TBAR.
MINING ACTIVITY
BBM Definitive Feasibility Study Update ? Costs Fall
Cokal is pleased to announce that the recently completed update of the Definitive Feasibility Study (DFS) conducted by consultants PT Resindo Resources (Resindo) indicates significant reductions in capital and operating costs for the PT Bumi Barito Minerals (BBM) coking coal project in Central Kalimantan, Indonesia. Together with the recent increase in coking coal pricing and its proximity to the growing Asian markets, BBM has become a more attractive investment opportunity.
DFS UPDATE
The Base DFS was completed in 2014, and since that time, Cokal has continued to complete a number of engineering studies and reviews such as geotechnicl and hydrology and contractor negotiations.
These resulted in some scope changes and costing refinements (which are also included in this update) none of which materially impacted the base estimate but did improve the accuracy of the estimate. The two key factors affecting costs which have changed from the Base DFS are the FOREX USD to IDR (Indonesian Rupiah) forecast and the fluctuations in the price of fuel.
Forex between USD and IDR is based on www.tradingeconomics.com analysts forecast predicted on Monday, October 17, 2016. This source?s Forex estimate in Q3 of 2017 is US$1 to IDR13,497. This forecast is considered to be a best case position. However, a conservative approach has been adopted by Resindo, downgrading this Forex prediction rate to US$1 to IDR13,000 for this DFS update. No variance or escalation has been applied over the project period.
PROJECT OVERVIEW
BBM?s Production IUP covers an area of 14,980 hectares (ha), and has received all the necessary regulatory approvals including Forestry Department; the IPPKH (Forestry Permit) which allows for the construction and operation of the port, haul road and initial mine development areas for Cokal?s initial mine plan of 2 Mtpa of premium coking coal from BBM.
The BBM 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 Crucible Swell Numbers (?CSN?) values generally 9 or more.
- Total Coal Resource estimate of 266.6 Mt at BBM, comprised of 19.5 Mt Measured, 23.1 Mt Indicated and 224 Mt Inferred Resources is reported in accordance with the 2012 JORC Code
- Product split for the total BBM Coal Resource is estimated to be 90% Coking Coal and 10% PCI
- Product split used in the DFS (approx. 20Mt) was approximately 82% Coking Coal and 18% PCI
- a life of mine strip ratio of around 18:1 and recovery rate of approximately 93.5%, delivering 2Mtpa product
CAPITAL EXPENDITURE
The total estimated development capital required for BBM to deliver a production rate of 2 Mtpa product, including developing a Coal Handling Preparation Plant (?CHPP?), a haulage road and all necessary transport and site infrastructure is now US$68M.
This assumes that mining, barging and hauling equipment will be provided by the respective contractors. These equipment cost are therefore included in the operating costs and do not form part of the capital estimate.
OPERATING EXPENDITURE
Operating costs have been estimated by Resindo on the basis that mining, hauling and barging equipment being supplied by contractors. The Study estimates an average Free on Board (?FOB?) cost of US$82/tonne of coal produced over the life of the mine. The estimated operating costs are real (not adjusted for inflation) and exclude royalties.
COKING COAL PRICING
With the spot price of coking coal continuing to rise (reaching US$340), and the quarterly contract benchmark pricing for premium coking coal recently settled at US$200/t, it is expected that the longterm pricing of coking coal will be adjusted upwards in response to this pricing fluctuations.
The spot price of PCI coal has also risen significantly from US$70/tonne last year to the current spot price of US$147/tonne (Coal Trader International 27thOct).
Cokal Director, Pat Hanna said ?The outcome of the quarterly contract pricing was better than expected and helps to ensure a very positive outcome to BBM?s net worth.?
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.
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 completed.
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.
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 prerequirement 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) 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.
CORPORATE SOCIAL RESPONSIBILITY
Cokal has continued with the implementation of its Community Development programs. Cokal has undertaken the following programs, which covered health, education, environmental awareness, and community empowerment aspects.
Regarding the health aspect, Cokal has continued to provide medical support to local villages around BBM through providing access to onsite medical staff.
Cokal has also continued its scholarship program with the selection of the new cohort of scholarship holders; Cokal has awarded scholarships to 13 local students from Murung Raya Regency to continue their next level of education at University of Palangkaraya at various faculties.
As well, in association with the Mining Faculty of the University of Palangkaraya, Cokal has continued its support and contribution that covered regular lecture programs, donation of mining magazines, and other support needed to improve the quality and enthusiasm of mining students. General Lecture on ?Exploration Technology? held on 5 December 2016 has been attended and well received by approx. 200 participants. During the next Quarter we will be providing a series of safety refresher lectures for not only mining students but also students involved in construction, architecture and related course.
Coordination is also being continued with BOS Foundation following their requests on other possible support needed, including supervision and training of HSE procedures. Safety Awareness and First Aid Trainings ? Phase 1 was provided and completed for 80 participants on 23rd ? 26th November 2016. All of those participants are orangutans baby-sitters and BOSF technicians. The next batch of training is still being prepared. Coordinations are also being continued with BOSF related to COKAL support plans for OU Translocation Project which possibly scheduled by BOSF on Q1-2017. As previously, BOSF will use Krajan Site (PT BBM) and its facilities as their ?transit venue? for orangutans recovery process. Other COKAL support which is also being discussed are supporting the costs of First Aid kits (mainly for the BOSF monitoring station at Betikap and Katingan Protection Forests) and also support on setting up BOSF Safety Management System as required.
Following obligations of BBM Forestry Permit (IPPKH-OP) obtained in August 2015, replanting programs were continued by Cokal, in relation with ?critical land rehabilitation project? at an appointed area in Barito Riverbanks Area, nearest the BBM project. These programs will be conducted with community involvement, planting ?productive trees? suggested by locals, and will be supervised and monitored by the relevant Forestry Offices from regency, provincial, and central government levels. Cokal has committed to fulfill both of IPPKH obligations and also sharing benefits from these programs with its local neighbors. (end of excerpt)