Cokal (ASX:CKA) has secured US$15 million ($23 million) in strategic debt funding from long-term shareholder Eddie Chin Wai Fong via International Commodity Trade.
The financing will comprise a combination of a US$1.5 million cash advance and US$13.5 million in bank loans. International Commodity Trade has the ability to alter the amount of the cash advance and bank loans to meet the financing commitment.
Under the financing structure, there will be an interest rate of 10% per year of the outstanding balance of the cash advance amount, paid monthly, and an 8% interest rate per year on the outstanding balance of the bank loan, paid monthly.
Cokal, which has a market capitalisation of $38.84 million, says the funding will be used to increase metallurgical coal production at the Bumi Barito Mineral Mine in Indonesia.
This will be achieved through investment in capital expenditure to further develop mining operations and increase transport infrastructure capacity.
Cokal adds that the increase of coal production will realise operational efficiencies resulting in lower costs for saleable metallurgical coal production, on a per tonne basis.
CEO Karan Bangur says this funding commitment underpins International Commodity Trade’s confidence in the company’s projects.
“The timing of the funding arranged by ICT is most crucial when suddenly the committed fund from Cratus was not made available,” Bangur says.
“Importantly, the funding is non-dilutive to other shareholders, as it is the spirit of ICT not to take advantage of delays or difficult times in Cokal to dilute other shareholders at a time when the share price is very depressed or sequester the underlying assets in a depressed pricing situation.”
Chairman Domenic Martino adds that the company is engaging with several parties to discuss the possibility of engaging self propelled barges to enhance the operational capability.
“There are now several prospective partners for this service,” Martino says.
International Commodity Trade is controlled by a party that also controls AMR Holdings, a substantial shareholder of Cokal holding 20.54% of its shares. The company is incorporated in Singapore whose main business is in investment and trading in coal.
Cokal is an Australian coal-focused company that has interests in four projects in Indonesia.
Write to Aaliyah Rogan at Mining.com.au
Images: Cokal
