Cokal signs agreement with Petrosea to boost coal production

Cokal Limited (ASX: $CKA) has signed a binding term-sheet with PT Petrosea TBK (Petrosea) to facilitate the near-term ramp-up of production from Cokal's Bumi Barito Mineral (BBM) metallurgical coal mine. The agreement provides Cokal with support to manage current contractors, expand operations, and increase production at BBM by increasing spending on production-related costs. This move comes as Cokal is capital constrained and aims to lower production costs per tonne with Petrosea's assistance in selecting mine service providers and optimizing their agreements.

Executive Commentary on Cokal's Agreement with Petrosea

Chairman Domenic Martino outlined the three pillars to transition Cokal to a fully-fledged, high-volume, metallurgical coal production company. The agreement with Petrosea marks the achievement of the first pillar, with plans underway to further develop logistics and refine transportation routes. The company is also focusing on developing logistics, specifically the barging component, to bolster its capacity and transform into a profitable operating coal production and logistics company. CEO Karan Bangur and his team have been instrumental in securing the support and commitment of Petrosea and Petrindo, marking a significant milestone for Cokal.

Summary of Cokal's Agreement with Petrosea

Cokal's agreement with Petrosea signifies a significant step towards ramping up metallurgical coal production at the BBM mine in Indonesia. The partnership aims to lower production costs per tonne and expand operations, with Petrosea's support in selecting mine service providers and optimizing their agreements. The company's ambitions include transforming into a profitable operating coal production and logistics company, with a focus on developing logistics and refining transportation routes. The signing of this agreement reflects Cokal's commitment to achieving its strategic goals and marks a key milestone in its corporate strategy.