Allegiance Coal release Short Creek JORC Resource statement

Highlights

• A large tier one underground deposit comprising 163 million short t with an additional 10 million t of coal available to be leased within the deposit area.
• A premium mid-vol hard coking coal of which 134 million t (87% of the resource) is comprised of the world class Mary Lee and Blue Creek seams (Blue Creek) and with a proven CSR of 69%, Blue Creek coking coal commands premium pricing alongside the world’s top hard coking coals.
• Allegiance intends to complete an independent feasibility study by calendar 3Q22 with project development commencing late 2022, for a production start date late 2023/early 2024, subject to financial and regulatory considerations.
• Completion of the acquisition, which is unconditional, is awaiting transfer of permits relating to Short Creek expected to be effected during 2Q22.

Coal quality

The Mary Lee and Blue Creek coke strength after reaction (CSR) was blended for coal quality analysis and a coke oven test undertaken in a semi-industrial moveable wall oven (the blend weighted slightly towards Blue Creek).

The Mary Lee and Blue Creek coal seams represent 87% of the coal resource and present as a tier 1 mid-vol hard coking coal highly regarded and sought after on the seaborne met coal market. Washability data indicates that at 1.45 – 1.40 SG the Mary Lee will wash to less than 10% ash, delivering an on-specification premium CSR hard coking coal.

Short Creek’s mid-vol Mary Lee Blue Creek sits comfortably in the middle of the market’s prime hard coking coals and, as a consequence, is expected to attract demand and premium pricing. In addition, the high-vol A version of Mary Lee Blue Creek from Allegiance’s Black Warrior Mine sits at the top of US prime high vol coking coals.

Geology

The property is located near the east-central portion of the Black Warrior Basin where the Newcastle, Mary Lee, and Blue Creek seams occur at depths ranging from approximately 300 ft to more than 1000 ft below the surface.

Newcastle and Newcastle Leader Seams

The Newcastle seam occurs in close vertical proximity to the Mary Lee seam (less than 6 in.), along the north-western portion of the property, which subsequently split apart to the southeast where the interval increases to as much as 40 ft. The Pratt seam is approximately 460 ft above the Newcastle seam and has been extensively mined by surface and underground methods across the property.

Newcastle seam thickness ranges from 0.0 to a maximum of 4.5 ft including non-coal partings, averaging 2.1 ft across the property. Occasionally, a thin rider coal overlies the main seam, but more commonly, a thin seam (Newcastle Leader) underlies the main bench. The Newcastle Leader seam ranges from 0.15 – 1.2 ft in thickness, averaging 0.5 ft. The potentially underground mineable extent of the Newcastle seam is found along the northern, western, and southwestern portions of the property.

Mary Lee Seam

The Mary Lee seam typically occurs as a single definable bench, with seam thickness ranging from 0.7 – 3.35 ft, and averaging 2 ft. Of the three seams located on the property, the Mary Lee seam exhibits the greatest consistency in terms of seam thickness, minimal non-coal partings, and distribution.

The potentially underground mineable extents of the Mary Lee seam are found across the entire property and would be mined in one sequence in conjunction with the Blue Creek seam, except along the eastern edge where the underlying Blue Creek seam would theoretically be mined alone.

The interval between the Mary Lee and underlying Blue Creek seam ranges from a few inches to more than 20 ft across the property.

Blue Creek and Blue Creek Rider Seams

The Blue Creek seam sits below the Mary Lee seam between a narrow parting and typically occurs as a single bench but splits into two benches with intervening rock partings in the southeastern portion of the property. Where present, the upper bench is referred to as the Blue Creek Rider, and ranges from 0.25 to 1.55 ft, averaging 0.75 ft in thickness. Blue Creek seam thickness ranges from 0.1 to 6.07 ft, averaging 2.4 ft across the property. Occasionally, a thick lower bench has been identified in the eastern part of the property. The potentially underground mineable extents of the Blue Creek seam are found across the entire property, either alone or in combination with the Newcastle and Mary Lee seams.

Next steps

Allegiance intends to complete an independent feasibility study on the proposed Short Creek underground mine no later than 3Q22 with a target to commence project development late 2022 and for a production start date late 2023early 2024, subject to financial and regulatory considerations. Further exploration work will be undertaken as part of the feasibility study and is expected to include additional drilling, geophysical logging, coal quality and geotechnical analysis.

Read the article online at: https://www.worldcoal.com/coal/11022022/allegiance-coal-release-short-creek-jorc-resource-statement/