Cokal's US$20 Million Funding Boosts BBM Coal Output and Logistics Efficiency

Strategic Funding Boosts Production and Infrastructure

Cokal Limited (ASX: CKA) has reported significant progress in its Indonesian coal operations for the quarter ending December 2024, underpinned by strategic partnerships and substantial funding commitments. The company secured US$3 million from PT Petrindo, its joint venture partner, with US$1.45 million already received through coal presales and US$1.56 million allocated for infrastructure enhancements. This funding is critical to expanding production capacity and improving logistics efficiency at Cokal's flagship Bumi Barito Mineral (BBM) metallurgical coal project in Central Kalimantan.

Further strengthening its operational and financial position, Cokal entered a transformative strategic partnership with Cratus Group, a leading bulk commodities and investment firm. Cratus committed a total of US$20 million, split between US$7 million to support Cokal's coal production and US$13 million dedicated to an Infrastructure Joint Venture (IJV) aimed at upgrading coal transport infrastructure. This partnership not only enhances coal sales and distribution capabilities but also introduces advanced transport solutions such as flat-bottomed barges, which promise to reduce logistics costs significantly.

Operational Advances and Infrastructure Development

Production at BBM is ramping up steadily, with the arrival of additional mining fleets expected to increase output in the coming quarters. As of October 2024, BBM had produced 80,000 tonnes of coal, comprising a blend of low volatility hard coking coal and high-grade thermal coal. Road upgrades in collaboration with PT Petrindo have improved haulage efficiency and reduced fuel costs, while the construction of a semi-permanent steel bridge over the Mohing River is set to ensure uninterrupted transport during the rainy season.

The IJV with Cratus is pivotal in expanding transport capacity via river barging, a more cost-effective alternative to road haulage. The dredging of the Barito River near the Krajan Jetty and commissioning of new barges will enable higher and more consistent coal volumes to reach market. Cokal maintains a dual logistics strategy, balancing river and road transport to optimise delivery reliability and cost.

Market Access and Sales Momentum

Cratus has been appointed as the sales and marketing agent for half of BBM's saleable coal production over a decade, leveraging its two decades of expertise and extensive market relationships. This arrangement is expected to drive superior pricing and terms for Cokal's metallurgical coal products. BBM has already completed initial shipments totaling 18,827 tonnes to China, marking a tangible step in commercialising its production.

On the regulatory front, Cokal continues to advance exploration and development activities across its portfolio, including the Tambang Benua Alam Raya (TBAR), Borneo Bara Prima (BBP), and Anugerah Alam Katingan (AAK) projects. While exploration at TBAR is temporarily delayed due to government moratoriums following Indonesia's recent presidential elections, necessary approvals are anticipated in early 2025.

Financial Position and Outlook

Despite a modest cash balance of US$254,000 at quarter-end, Cokal benefits from undrawn financing facilities totaling US$1.55 million and ongoing funding arrangements with its partners. The company reported net cash outflows from operating and investing activities, reflecting its investment phase, but anticipates improved cash flows as production and sales volumes increase. CEO Karan Bangur highlighted the importance of these partnerships in underpinning Cokal's expansion and ensuring coal delivery capabilities keep pace with production growth.

Environmental and social responsibility remain integral to Cokal's operations, with ongoing compliance monitoring and community support initiatives, including assistance following recent floods in the Murung Raya region.