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Killara Resources sells first thermal coal to Glencore

World Coal,

The board of Killara Resources has announced it has sold its maiden barge of coal from its Borneo Emas Hitam (BEH) concession, located in East Kalimantan, Indonesia, to Glencore International AG (Glencore).

For the first time, the company has moved from coal exploration to production. Directors said that the maiden sale to Glencore was therefore “a pivotal moment in the history of Killara.”

Killara sold 4500 t of coal to Glencore at a fixed price US$ 51.50/t, (AU$ 54.50/t), with gross revenues coming to approximately AU$ 246 000.

Production delays

Overburden removal had commenced at the BEH minesite, and the board had anticipated making its first sale in Q1 of this year.  However, Killara blamed production delays for a lower coal output, which in turn pushed the date of the first sale into April.

The production delays experienced with the contractor Berkah Ciwi Lestari Kaltim (BCLK) were not resolved to the satisfaction of Killara. The company therefore announced that it had terminated the services of the contractor. The board and management announced that they would now seek an alternative contractor and remain optimistic that the production of coal will resume at acceptable levels over Q2.

Robert Kipp, managing director of Killara, said that, “while disappointed with the temporary delay in production, we are delighted with the achievement of this maiden sale of coal, which marks a significant milestone for the company.”

Interest from buyers

Since commencing coal production in January 2014, Killara has been approached by various coal buyers for all the coal from the BEH site and is currently is discussions regarding long-term supply arrangements. Such arrangements would help underpin revenue for the company, Killara announced in a statement.

BEH concession site

The production permit for the BEH concession is listed as “clean and clear” by Indonesia’s department of Energy and Mineral Resources and covers a 1002 ha area in the Tenggarong district in East Kalimantan. The mining license expiries in December 2017, with Killara’s joint venture partner responsible for extending the permit. 

The minesite is divided into three blocks, which are the Eastern block, the Central block and the Western block. Killara’s priority for the concession is on the Eastern block-based outcrop and drilling data.

Coal from the project has been confirmed as a direct shipping thermal coal product with high CV and low ash, but with varying high sulfur levels.

Mining was ongoing at the BEH concession until early 2013, with some coal still stockpiled at a nearby barge facility. Infrastructure to support mining activities including roads, offices and workshops, remain onsite.

Existing roads provide access to several large facilities all within 5 km haulage distance from production targets. Barge facilities load onto the Mahakam River, which at Tenggarong is roughly 450 m wide and conducive to barging throughout the year. Transhipment facilities exist 150 km down river at the Samarinda Delta. 

Edited from various sources by Sam Dodson

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