Cokal Ltd (ASX:CKA) has signed an agreement with Indonesian mining services company PT Petrosea TK which will enable it to ramp-up production from the Bumi Barito Mineral (BBM) metallurgical coal mine in the same country in the near term.
The deal (or ‘Term Sheet’) – signed between Cokal’s 60% owned subsidiary PT Bumi Barito Mineral and the major Indonesian player – will bring on contractor and vendor management services to facilitate operation expansion and increased production from the mine, which is located in the Central Kalimantan Province.
Cokal is expecting lower production costs per tonne as a result, capitalising on Petrosea’s status in the Indonesian mining sector to select and optimise terms of agreements with relevant contractors; in addition, payment terms for mine service providers – including those involved in fuel and blasting – are set to be extended by an additional 120 days.
To underscore the relationship, Petrosea will also be appointed lead mining contractor at BBM from 2025.
Chairman Domenic Martino said the plan to grow Cokal into a ‘fully-fledged, high volume metallurgical coal production company’ was developed around three pillars.
“Number one: provide capital, technical knowhow and resources to ramp up production to high value levels,” he said.
“Number two: provide capital, technical knowhow and resources to further develop and refine logistics to a sustainable, high volume transportation route to market for our high value product; and
“Number three: develop logistics, specifically the barging component, with new flat bottom self-propelled barges foreshadowed in the original feasibility study to be able to operate in high and low river level environments.”
Mr Martino said that inking the deal with Petrosea meant that the first target had been achieved, and the second was in progress through an infrastructure development agreement with Petrindo (Petrosea’s sister company) announced earlier in the year.
The market seemed pleased with the news, and at 12:57 AEDT, Cokal shares were trading at 9.6 cents, a rise of 12.94% since the market opened.