PERTH (miningweekly.com) – ASX-listed Cokal has secured a $20-million debt financing facility to fund the development of its Bumi Barito Mineral (BBM) coking coal project, in Indonesia.
A binding letter of intent has been provided by China Railway 21st Bureau Group International Engineering Co and Beijing Fidick International Trade Co, with the funding to become available for drawdown on the execution of a definitive agreement, which will be completed within the next 60 days.
Cokal told shareholders on Wednesday that the company has been in discussion with the funding partners for more than 12 months, with both financiers having completed due diligence on BBM and its associated infrastructure.
Once final documentation has been signed, the funding can be drawn down in multiple tranches, with each tranche repayable within five years from the date of drawdown, with Cokal expected to repay the debt from project operations.
The fee for the debt finance is lined to BBM mining operations, and will be capped at $40-million.
“Cokal has developed a much sought after coal project in BBM to production-ready stage, and is highly motivated to commence production in order to realise the inherent strategic and financial value of the asset,” said Cokal chairperson Domenic Martino.
“Coal production from BBM will generate reasonably attractive profits in the current market situation, with substantial growth potential, as the global economy improves, and returns for its shareholders.”
Cokal holds a 60% interest in the BBM project, which is expected to produce at a rate of two-million tonnes a year of saleable coal from its third year of production.