Cokal Limited has secured a strategic US$15 million debt facility to support infrastructure and coal production at its Indonesian BBM mine, while cautiously navigating weak market conditions with minimal production and resumed domestic shipments.
- US$15 million strategic debt funding secured from major shareholder
- Minimal coal production maintained amid weak global demand
- Resumption of domestic coal shipments to local smelters
- Key regulatory approvals obtained for TBAR exploration project
- Termination of Cratus agreements; exploring new logistics partnerships
Strategic Funding to Sustain Development
Cokal Limited (ASX, CKA) has taken a decisive step to bolster its financial footing by securing a US$15 million strategic debt facility from International Commodity Trade Pte Ltd, controlled by long-term shareholder Eddie Chin. This funding is earmarked to accelerate infrastructure development and metallurgical coal production at the company’s flagship Bumi Barito Mineral (BBM) mine in Central Kalimantan, Indonesia.
The facility, structured as revolving debt over three years, will underpin capital expenditure on mining operations and transport infrastructure, aiming to enhance operational efficiency and reduce unit costs. This injection of capital comes at a critical time as Cokal navigates a challenging market environment marked by subdued demand and pricing pressures for metallurgical coal.
Operational Strategy Amid Market Softness
In response to persistent market weakness, Cokal has adopted a conservative production approach, operating at minimal levels to preserve resources and maintain cost discipline. The company resumed limited domestic coal shipments during the quarter, delivering 7,407 tonnes to a local smelter in Morowali, Indonesia, signaling a cautious return to revenue generation after a temporary pause.
Looking ahead, Cokal plans to selectively mine near-exposed coal seams at Pit 3, which offer favourable strip ratios and allow for low-volume production aligned with current market realities. This strategy aims to avoid excess inventory buildup and financial strain, preserving cash flow and operational flexibility while continuing infrastructure upgrades.
Progress on Indonesian Coal Assets
Beyond BBM, Cokal holds significant interests in adjacent Indonesian coal projects including Tambang Benua Alam Raya (TBAR), Borneo Bara Prima (BBP), and Anugerah Alam Katingan (AAK). Notably, TBAR secured key regulatory approvals during the quarter, marking a milestone toward commencing exploration activities once further permits are obtained.
Infrastructure development at BBM continues despite some delays caused by environmental factors such as low river water levels affecting jetty construction and barging operations. Road upgrades and construction of a magazine warehouse to support future blasting activities are progressing, with controlled blasting expected to commence in October 2025 to improve mining efficiency.
Logistics and Partnership Changes
Following the termination of agreements with Cratus due to their failure to meet contractual and funding commitments, Cokal is actively pursuing alternative logistics partnerships. The company is engaging multiple prospective partners and exploring options such as self-propelled barges to enhance coal haulage efficiency, critical for scaling production when market conditions improve.
Financial Position and Outlook
At quarter-end, Cokal reported US$631,000 in cash with undrawn financing facilities of US$6.9 million, reflecting a cautious but stable liquidity position. The company continues to exercise strict cost control and operational stability, positioning itself to weather current market challenges while preserving long-term value for stakeholders.
As the metallurgical coal market remains volatile, Cokal’s focus on infrastructure readiness and selective production aims to enable a swift response to any recovery in demand and pricing.
Bottom Line?
Cokal’s strategic funding and infrastructure focus set the stage for a measured production ramp-up when market conditions improve.
Questions in the middle?
- When will Cokal secure the remaining regulatory approvals to commence TBAR exploration?
- How effective will new logistics partnerships be in improving coal haulage efficiency post-Cratus?
- What market signals will trigger Cokal to increase production beyond minimal levels?