Join our daily newsletter At The Bell to receive exclusive market insights
- Bowen Coking Coal (BCB) has provided an update on operations and its cash position for the June quarter
- An important milestone for the company was the binding agreement with Peabody to acquire the Broadmeadow East Project in Queensland
- Conveniently, the project lies 30 kilometres northwest of BCB’s Isaac River Project and 45 kilometres south of its Hillalong Coking Coal Project
- Sumitomo chose to proceed with the Hillalong Joint Venture by funding $2.5 million to gain a 10 per cent interest in the project
- In late-June, Bowen Coking Coal raised $2.25 million to go towards the Isaac River Project
- Furthermore, Bowen Coking Coal ended the quarter with just shy of $2.4 million
- Company shares ended the day in the grey, to trade for 5.3 cents each.
Bowen Coking Coal (BCB) has provided an update on operations and its cash position for the June 2020 quarter.
Broadmeadow East Coking Coal Project
On June 24, Bowen Coking Coal announced a binding agreement with Peabody Energy’s subsidiary, Peabody Burton Coal, where BCB will acquire the Broadmeadow East Project.
Broadmeadow East is located within Mining Lease 70257, which is situated 25 kilometres northeast of Moranbah in Queensland.
Conveniently, it’s located 30 kilometres northwest of BCB’s Isaac River Project and 45 kilometres south of its Hillalong Coking Coal Project.
Xenith Consulting were commissioned to review data and have completed a JORC-compliant resource estimate of 33 million tonnes.
Positively, BCB has begun analysing the washability data which has confirmed the coal can be washed at lower density levels to create a high quality product at roughly 8.7 per cent ash with crucible swelling number (CSN) as high as seven.
The acquisition includes access rights to the New Lenton Joint Venture Coal Handling and Preparation Plant (CHPP) and Train Load Out Facility (TLO), which are connected by a haul road that’s immediately adjacent to ML 70257.
The acquisition has a cash consideration of $1 million on completion and a royalty of $1 per tonne on all coal produced and sold from ML 70257. The royalty will be capped at 1.5 million tonnes which equates to $1.5 million.
A $500,000 cash consideration for land compensation will also be paid once site works begin or the mining lease renewal – whichever happens first.
Hillalong Coking Coal Project
Hillalong is located in the northern Bowen Basin, roughly 105 kilometres west-southwest of Mackay, Queensland.
Following the completion of the $2.5 million phase one exploration program at Hillalong, Sumitomo Corporation chose to proceed with the Hillalong Joint Venture to gain a 10 per cent interest in the project.
Sumitomo agreed to fund $2.5 million of exploration expenditure to gain 10 per cent in Hillalong. It also has the right to gain an additional 10 per cent after providing a further $5 million for phase two activities.
BCB and Sumitomo are now formalising the unincorporated Hillalong JV and Sumitomo will continue providing support to secure future development funding.
During the quarter, Xenith Consulting estimated a total resource of 43 million tonnes, of which 19.5 million tonnes is shallower than 150 metres depth.
Isaac River Coking Coal Project (MDL 444 and EPC 830)
BCB expected to lodge the required Environmental Authority Application for the project during the quarter. Unfortunately however, it faced set backs due to delayed land access as a result of the wet season.
Instead, BCB completed further environmental assessments to prepare for post-wet season conditions. The company now expects to lodge the application during the September quarter.
Matt Latimore
In mid-June, Matt Latimore was appointed as a Non-Executive Director. This represents the last step in formalising the Marketing Joint Venture (JV) between BCB and M Resources.
The Marketing JV will promote and sell all coking coal produced by and from any of BCB’s coking coal portfolio, as well as third party coal for blending purposes.
M Resources has agreed to provide BCB with a finance facility of up to $15 million. This money will develop the Isaac River Coking Coal Project, or any other of BCB’s projects.
Placement
In late-June, Bowen Coking Coal raised a total of $2.25 million. The company issued 45 million fully paid ordinary shares to unrelated sophisticated and professional investors at five cents each.
The funds would go towards the acquisition and transaction costs of the Broadmeadow East Project, related studies, placement costs and working capital.
The company received the funds earlier this month.
Cash position
BCB spent $517,000 on operational activities – most of which covered administration and corporate costs.
A further $448,000 went towards investing activities, particularly exploration and evaluation on the farm-in project with Sumitomo
Furthermore, the company reported $485,000 in net cash generated from financing activities.
Cash and cash equivalents at the end of the quarter totalled $2,394,000 which is down from the $2,874,000 in cash at the end of the March quarter.
Company shares ended the day in the grey, to trade for 5.3 cents each.
