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Cokal close to finalizing A$400M contract for coal off-take from BBM project

Cokal Ltd. is working out the pricing mechanism for coal off-take for 2.5 million tonnes of premium PCI coal from the BBM project in Indonesia, with the contract valued at about A$400 million.

Renjian International Trading (Shanghai) Co. Ltd. sent a letter of intent to the company in September for a coal off-take financing transaction.

The coal will be supplied in shipments of 50,000 tonnes per month over the term of the agreement, with each payment to be three months before the shipment date.

Cokal said Dec. 20 that intends to reach an agreement by the end of this month.

The company will receive funding equivalent to three months of coal sales, totaling about A$25.0 million, in three tranches, with the first tranche to be receive by Dec. 27.

The initial prepayment will be repaid by Cokal via the delivery of PCI coal, with the maiden 50,000 tonnes delivery due in March 2018.

Cokal plans to use the funds for provide working capital and for commissioning and ramp-up of mining operations at the BBM PCI site, which is an extension of the BBM Anak operation.