High-margin metallurgical coal-focused company Cokal [ASX:CKA] released a market update in regards to its infill drilling program at the Bumi Barito Mineral (BBM) Metallurgical Coal Mine.
The group said drilling has begun and is targeting conversion of BBM’s significant 260.2Mt (million tonne) resource base into extra resources, potentially extending mine-life and production capacity.
Shareholders downvoted the coal miner’s share price by 6% by midday.
CKA shares have taken a 25.5% defeat so far in calendar year 2023, and a 13.5% drop over the past 12 months.
In its industry, CKA is down 10% on average, and continues to hang lower than the wider market after a brief reprieve:
Source: TradingView
Cokal commences BBM metallurgical coal drilling
Today, Cokal wished to update the market on its activities at its flagship BBM metallurgical coal mine based in the Central Kalimantan Province of Indonesia.
Cokal owns 60% of the project, and has since found multiple seams of high quality metallurgical coal in the licenced area.
To this end the coal miner has begun infill drilling, targeting conversion of BBM’s significant 260.2Mt resource base (18.8Mt measured, 22.9Mt indicated and 218.5Mt inferred) into reserves.
Cokal says the results will form a basis for further resource, reserve, and expansion plans, potentially extending mine life and production capacity.
Infill drilling has been set in the extended pit and in Seams J and I, which are adjacent to the Pit 3, via partial core metre drilling 1–3 meters after Seam I.
The drilling program consists of 42 new drill holes of the most prospective targets closest to the Pit 3 crop line area, and is planned to be spaced 100 metres, but is also said to include additional area spacing of 150–200 metres.
The project’s permit covers an area of 14,980 hectares within the highly prospective Central Kalimantan coking coal basin adjacent to Indomet’s extensive coking coal tenements.
With drilling now underway, Cokal believes the estimated time frame will be around 80 days, including sample results.
Aside from the coal mine drilling program, Cokal is also working through engineering and fabrication design for the planned Batu Tuhup Jetty.
The Batu Tuhup Jetty construction will initially comprise a 1,000-tonne per hour coal handling facility and loading jetty, where it will load coal from stockpile to barges with a 4,000 DWT capacity.
Cokal to deliver to offtake partners
Cokal already has arrangements made with offtake partners to sell its current product, and there are now enough coal stockpiles at the Batu Tuhup Jetty to begin shipments to offtaker PT Sumber, who’s responsible for sending its own barges to collect the coal.
Cokal will receive 50% of the payment for the coal upon Sumber’s barges arriving, an additional 40% after loading, and the final 10% when documentation is finalised.
Initial sales will be oxidised material taken from the top of the coal seam and will be sold as high-grade thermal, with current mining having already reached high grade.
Cokal will update the market when the Sumber’s barges arrive to take delivery of first sales.
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