The small Queensland producer of pulverised coal injection-grade metallurgical coal and thermal coal is aiming to lift output of its Baralaba mine from 1 million tonnes per annum to 3.5Mtpa.
Yesterday Cockatoo extended its halt to next Tuesday and said the “finalisation of arrangements” for a funding-related announcement was continuing.
The delay follows press speculation last week that Cockatoo not only retrenched 40 contractors but was “increasingly unlikely” to clinch a long-flagged funding deal with ANZ.
“It’s an extremely difficult market for resource funding generally but particularly for the coal space,” Wendt told ICN.
“Coal really is a four letter word at the moment.”
He said there was already enough thermal and metallurgical coal on the market and did not expect to see any meaningful uplift in prices for at least another 12 months.
“The difficulty for companies like Cockatoo Coal which are looking for financing is that it’s a very tough ask at the present time just because of all the sector fundamentals,” Wendt said.
About a year ago Cockatoo outlined key conditions of a proposed $A255 million Baralaba expansion project finance facility from ANZ that included gaining regulatory approvals; securing offtake agreements for at least 75% of output; a continued commitment from partner JFE Steel; and sufficient financing to fund project development to a “P50 contingency”.
Cockatoo received federal environmental approval for the project on December 22 but still needed Queensland environmental and mining licence approvals.
While low coal prices are an expected hurdle for the financing talks, Cockatoo is also locked into a contract to rail 3Mtpa of coal to Wiggins Island Export Coal Terminal which will burn cash if the Baralaba expansion project does not go ahead.
The 27 million tonnes per annum coal export facility was expected to start shipping coal in November last year, but that month it pushed it back to March 15.
The September collapse of WICET member Bandanna Energy already forced the other WICET partners to increase their financial commitments.
