Pour the coconut into the bowl of a food processor and process 10-12 pulses. Add the powdered sugar, sweetened condensed milk, 1/4 cup of melted coconut oil and coconut extract. Process until well combined. Scoop the mixture into a medium mixing bowl, cover with plastic wrap and refrigerate for at least 1 hour, or overnight. The mixture will become firm once the coconut oil solidifies.
Line a rimmed baking sheet with wax paper. Scoop 1 heaping tablespoon of the coconut mixture and roll into a tight ball. I use a 1-inch cookie scoop to make this easy with each coconut ball similar in size. Place on the baking sheet and continue until all the coconut mixture is rolled. Work quickly while the mixture is cold. Freeze the coconut balls until firm, about 2 hours, or longer if desired. Once frozen the coconut balls can be transferred to a sealed container with a sheet of wax paper between the layers.
When ready to dip in chocolate, line two baking sheets with wax paper and set aside. Place a heat-proof mixing bowl over a saucepan of hot, lightly simmering water. The water should not touch the bottom of the bowl. (Or use a double boiler) Set the heat on low, not boiling. Add 1 tablespoon of coconut or vegetable oil to the mixing bowl. Once melted, add about half the chocolate chips. Stir occasionally until all chips are melted.
To dip the balls in chocolate, you will need a fork, a skewer and a spoon.
Work with 5 or 6 frozen coconut balls at a time, leaving the remaining balls in the freezer until needed. Scoop some of the chocolate onto the tines of the fork. Working quickly, place a frozen coconut ball on the fork and spoon chocolate over the top until completely covered. Tap the fork firmly on the side of the bowl several times. This helps cover the ball and removes the excess chocolate. Slide the skewer along the tines of the fork pushing the ball onto the prepared pan. Immediately top with shredded coconut, if using, to garnish.
Repeat until all balls are dipped, using the remaining 1 tablespoon oil and chocolate chips when needed. You may need to wipe the skewer and fork clean using paper towels a few times while dipping all 50 (+-) balls. When the sheet pan is full, freeze the coconut balls for at least 1 hour. Transfer to a sealed container to store for up to a month.
Serve frozen or slightly thawed for best results.