These are my notes from the AGM presentation as it happened.Any others that attended please jump in and add or correct.
Pat made the comment “nowCokal is totally focused on getting the mining up and running with Jim on board.He is a hands on man and the other thing is Jim is considering to move up therefor about a year and will spend a lot of time on site.
Gary is going to be working in government relations and willbe reporting direct to Jim, Gary has the experience in Indonesia. Anyone in theteam in Jakarta knows that Gary has the contacts to resolve the issues.
Mine site manager to report directly to Jim, he has been onsite already and a lot of experience in Indonesia in various types of mines.
Still talking to Aahana. They have been on site, now askingquestions, small placement to keep their hand in likely soon.
Currently in Due diligence period with BMA, they have twodrill rigs on site now and are moving along,. Some of the drilling sites to bealongside existing holes to confirm results, as well other holes that will allowan increase to reserves above the current 21.6 MT. This will also allowGeotechnical rules for Pit 1 and pit 2 to be met,
Question was asked about if/what are BMA concerns with the JORC…answer from Pat was they are looking if the strip ratio may be to high etc, theyare not use to Coking coal they deal with thermal coal, strip ratio Cokal usesis higher than they are use to, however because of difference in price betweenthermal and coking you can go into a much higher ratio. The other question theyhave is in regards to barging costs potentially being higher than expected(which Jim and Pat think is a non-issue)
The other comment was that this drilling from BMA “ is allpart of them negotiating the end deal, and that’s why we need three options”
“There is no doubt they are shaping up for the final negotiation.Cokal has outlined the parameters, but this is the way of business in Indonesia.”
BMA think Time frame on Drilling through to January February,then analysis two weeks. However Cokal expect to be in production before theend of that, and moving gear onsite in January.
Pat seemed to think once they see the first 5 holes or sodrilled by BMA match up data wise, they may jump on board well before theyfinalise the 2000m of drilling. They have some small equipment available andthey are prepared to put that up before the end of due diligence. That will be usedto get the road sorted out and everything ready for production.
Cokal think they are in the Box seat. “The generally feelingis that they want to do this and that we will have a deal at the end of theday. This is all about the margins.”
“This is also why the other options are still alive..to puta bit of pressure on and no put all eggs in the one basket again like therenjin deal.”
Question asked about BMA’s work on site on getting a goodsense of the project and resources, whatis to stop them offering a 100% premium on the current price, as that seems itmay be more of an attractive position for them rather than funding the $60m oddfor 50% or so of profit share. Are there any defensive measures in place. Dom’scomment was that there is nothing stopping them from making a bid but doesn’t thinkthat it would be successful at that level as most of the major holders would notbe interest at this point, and it is not really a concern to them at thispoint. It is generally not the way BMA operate, they make their money from production,Coking coal isn’t their usual space, and they don’t know how to do the logisticsand don’t have they same sales relationships in the coking space.
Existing port is flawed but will be used in the short term,52km road and other port not required anymore. As the new proposed krajan portwill be the sole loading site once established. This saves $26m off the capitalrequirement and $7 off transport
LG are very keen to do something however will move slowly….waitingto hear back from them, may force existing players hands.
Sojitz would like to be exclusive marketer for Cokal, but plentyof demand from others for the product.
Stages of development are well covered in slides so no need toexpand too much -
Three stages of development. 1st is 7500t/monthfrom pit 2 in Q1 2019 using old port while river in flood. Confident they can kickthis off themselves if need be.
Not allowed to say they are going to take BBM up to 3MT peryear because there hasn’t been a study yet but Coal Man says they are going to 3MTnot 2MT.
Pat said PCI currently at about $135/T Cokal PCI is abovepremium, low ash, low vol ,low phosphorus premium above current price. Coking Cokal - unsure at this point on coke strength andat worst might be medium hard and not all hard, but has low ash, low sulfur, ultralow phosphorus. Price should be within 5-10% of premium HCC price at worst. lookingat also utilising highwall method to increase tonnage at less than $20T
Question asked about how far away is final financing and whenexpected to go binding, as this seems to be stopping any production. Jim said they plan to kick off in Q1 from PCI themselvesregardless even if BMA is foot dragging.
Clarification around Aahana involvement as question askedthat it was assumed that they have been ready to go for a number of months. Whatthey (Aahana) are saying is that they will lay out their final proposal on the10th of this month.
Aahana initial proposalwas on profit share arrangement of 40% up to 4MT of total production to fundPCI. It may be the case that Cokal use a combination of both Aahana and BMA ,orjust one. expect this outcome to come together quickly from here.
BMA deal terms still Unsure at this point, may look like 50%- 60% to BMA until they cover their capex , then may swing the other way with60% to Cokal. This would only be on the amount of coal that BMA say we have in resources(20Mt odd ) and when that expires the deal with them expires and they don’t getthe full 200MT of reserves.
Barging – 28 sites on upper river that need to be improvedgradually over 2 years - expect to cost about $5m
Vietnamese company found that is barging in 2.2 meters. Theycan build barges to spec and supply the push tugs. Looking at 1500t barges. Jimplanning on going over on the 24th December to look at theiroperation.
Cokal expect they can use the existing standard barges up toOctober November dry season. Last time they barged they got down river fromexisting port with a 4.5 metre draft. Shallow draft option will be availablewell before then and will scale up as production scales up to the 3mt/year.
First sales expected by end of Q1 2019. Comment that buyersare lining up.
Questions asked before the presentation were;
- in relation to the recent audit and fraud. They are highlyconfident that all this is being appropriately rectified and have been puttingmeasures in place to ensure against it in the future.
Approval of 10% placement is just to provide further financingoptions going forward. At this point in time there is no intention to do araise in the near future.
They think all licencing for TBAR can be done in about 18 monthsand they are pushing this along as a priority.
Western side of river (anthracite) can be mined withouthaving to do any formal drilling and measuring work
How BMA would be acquiring their shares was not discussed asfar as I recall.
That’s it folks.
That’s about it as I recall!
A bit to still be done, but a very positive feel in the roomfrom the guys. Personally very excited to hear about the idea to take it to 3MTinstead of 2MT.
Yeatesy.
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