Cokal Secures A$238M Financing and Boosts Infrastructure to Accelerate BBM Coal Production

Strategic Financing and Infrastructure Milestones

Cokal Limited (ASX: CKA) reported significant progress in the first quarter of 2025, reinforcing its position in the Indonesian metallurgical coal sector. A highlight was PT Petrindo, Cokal’s joint venture partner, securing IDR 2.4 trillion (approximately A$237.8 million) in financing to develop its nearby metallurgical coal mine and associated transport infrastructure. This funding is pivotal, enabling co-development of critical coal transport assets that will accelerate production ramp-up at Cokal’s Bumi Barito Mineral (BBM) project while lowering costs per tonne.

The completion of a semi-permanent steel bridge over the Mohing River in February, operational by March, marks a key infrastructure upgrade. This bridge enhances haul road capacity, addressing previous bottlenecks and improving coal logistics efficiency. Concurrently, ongoing road upgrades from KM 98 to KM 70 and improvements at Batu Tuhup Jetty access continue to support the company’s dual road and river logistics strategy, ensuring supply chain resilience.

Strategic Partnerships Bolster Financial and Operational Capacity

Cokal also formalised a US$7 million coal prepayment and offtake facility with Cratus Group, a bulk commodities and investment firm. This agreement not only provides immediate financial resources to accelerate development but also secures Cratus’ offtake rights to BBM’s coal production. The partnership extends beyond financing, with Cratus contributing expertise in coal sales, marketing, infrastructure development, and equipment procurement, enhancing Cokal’s operational capabilities.

Meanwhile, Cokal’s major shareholder, Chin Wai Fong, continues to provide crucial financial support during a period of subdued metallurgical coal prices. This backing has been instrumental in maintaining operational stability and positioning the company to capitalize on future market improvements without diluting shareholder value.

Project Development and Exploration Outlook

On the operational front, the Definitive Feasibility Study (DFS) for underground mining at BBM reached 70% completion by March 2025, with finalisation and government submission expected in Q3 2025. The company is advancing site preparation and coal processing infrastructure evaluations to support long-term efficiency.

Logistics enhancements include a new hauling services agreement deploying up to 100 heavy-duty trucks, with 20 already operational and 30 more expected by Q3. These efforts align with Cokal’s goal to scale BBM into a low-cost, high-volume operation capable of delivering sustainable profitability across market cycles.

Exploration activities continue across Cokal’s four Indonesian tenements, BBM, Tambang Benua Alam Raya (TBAR), Borneo Bara Prima (BBP), and Anugerah Alam Katingan (AAK), with no changes in ownership. While exploration at TBAR is temporarily on hold pending regulatory approvals, preparations for a full-scale drilling program are underway. The company remains focused on expanding its resource base, particularly on the West Block of BBM, which shows promising coal quality potential.

Financial Position and Market Context

Cokal ended the quarter with a tight cash position of US$27,000 and undrawn financing facilities of US$1.55 million. The company reported net cash outflows from operating and investing activities, reflecting ongoing exploration and development expenditures. Despite these challenges, management expresses confidence in navigating the current market downturn, supported by strategic partnerships and shareholder backing.

The metallurgical coal market has experienced price softness recently, but Cokal anticipates improvement as economic cycles evolve. The company’s infrastructure investments and production ramp-up plans are designed to position it advantageously for a market recovery.