Killara Resources has received confirmation from its proposed coal off-taker Coal Operations & Assets (COPA) that it has completed due diligence of mining reserves and production at the PT Borneo Emas Hitam (BEH) project in East Kalimantan. In accordance with the agreement which was signed in late October, an advance payment of US500,000 is now due to Killara.
The offtake agreement covers 100% of Killara’s coal production, providing sufficient ongoing revenue to render Killara cashflow positive over the coming months.
The sale price of coal will be locked for 12 months then linked to market prices with anticipated gross margins to Killara of US$14.50 per tonne. This development is significant for Killara, a $6.5 million company expected to be cashflow positive in the short term.
The BEH concession is divided into three blocks - eastern, central and western. Killara has identified a total of 56 outcrops within the concession area and its priority, based on outcrop data, is on the eastern block.
Coal Operations & Assets has been established by experienced German coal operator and trader Carlo Liszetzki, who has extensive hands-on experience in coal operations and has been trading for more than 28 years, including previous work experience in Europe, predominantly Germany.
He has been involved in Indonesia since 2004, together with Jay Alatas (the chairman of PT Hikmah Albros and commissioner of Bumi Resources from 2001 to 2012) Along with Jay Alatas and others, Carlo Liszetzki has established COPA with the aim of becoming a reliable supplier of coal from Indonesia.
COPA has entered into agreements to supply a minimum of 1.4 million tonnes to a group of Chinese power plants within the next year. It is anticipated that coal from the BEH project will be blended and used within the Chinese power plant industry.