The ASIA Miner - Reporting Important Issues to Mining Companies in the Asia Pacific Region
Issue link: https://asiaminer.epubxp.com/i/830355
Volume 14 • Issue 2 | 2017 | ASIA Miner | 19 Indonesia AN update of the 2014 definitive feasibility study (DFS) for Cokal Limited's Bumi Barito Minerals (BBM) Coking Coal Project in Central Kalimantan has revealed significant reductions in capital and oper- ating costs. Together with the increase in coking coal prices and its proximity to growing Asian markets, Cokal says BBM has become a more attractive opportunity. 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 geotechnical and hydrology, and contractor nego- tiations. These resulted in some scope changes and costing refine- ments, 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 US Dollar to Indonesian Rupiah forecast and fluctuations in the price of fuel. The DFS update has continued to show that the BBM coal mine and associated transport system can be developed as a low capital cost operation with moderate to medium range operating cost. The update maintained the development as a 2 million tonnes per annum open cut mining operation over 10 years. BBM's relatively low ash, low volatile, low sulphur, ultralow phosphorus coking coal would command a high value as a blending feed in the premium coking coal market. Capital cost has fallen by 10.3% to US$68 million while the al- ready low cash operating cost, excluding royalties of 7%, unit rates have fallen 15.5%. The initial start-up capital has decreased from US$50 million to $47 million and after start-up enhancement capital from US$25 million to $21 million. Meantime, Cokal is continuing discussions in relation to docu- menting the agreed conversion of the Platinum loans to a produc- tion royalty. In early April Cokal was awaiting the next version of the agreement from the Liquidator of the Platinum Partners Value Arbitrage Fund and the Receiver of the Platinum Partners Credit Opportunities Master Fund. Cokal said that it anticipated that the agreement could be completed and executed by both parties be- fore the end of April. The company's directors provided some financial assistance pending finalisation of the debt conversion agreement to meet working capital requirements. In a statement the company said completion of the debt conversion agreement was necessary prior to completing arrangements to fund the BBM project. CIMIC Group's global mining services provider Thiess has recently secured A$134 million worth of contracts to provide mining solu- tions to coal operations in Indonesia. Thiess has a new contract with Cakrawala Langit Sejahtera (CLS) and a contract extension that continues to build its partnership with Bayan Resources Group. The contracts will be delivered over 15-months, through a unique mining solution developed by Thiess for these adjoining pits in the South Kalimantan region. Thiess will share resources across the Arutmin-owned, CLS-man- aged Satui and Bayan's Wahana coal mines, and has undertaken the mine planning and engineering to develop these two mines as a single operation. CIMIC Group chief executive officer Adolfo Valderas said, "Thiess' innovative approach will ensure the best outcome for both our cli- ents, providing greater value and further enhancing our position in Indonesia." CIMIC's Group executive Mining and Mineral Processing and Thiess managing director Michael Wright said, "This solution en- ables us to maximise coal recovery and extend the reserves of our clients' operations. "This is a significant achievement for Thiess, and we are pleased to continue to build relationships based on the value we bring to clients. We look forward to working with CLS, and continuing our successful partnership with the Bayan Resources Group," he said. These contracts follow a contract extension awarded to Thiess last November for Bayan's Melak operations in East and Central Kalimantan. The extension until March 2022 involves additional rev- enues of A$530 million and builds on an existing three-year con- tract for the mining development and operations at the Teguh Sinar Abadi and Firman Ketaun Perkasa concessions. Michael Wright said, "We are proud of our ability to continue to demonstrate value to our partnership with the Bayan Group, build- ing on our long history of success at Melak where we've been op- erating since 2008." BBM DFS update reveals cost savings Thiess delivers unique coal solutions