Paringa Resources Ltd has announced the results of a scoping study on the Buck Creek No.2 mine, which is located within the Buck Creek mining complex and south of the Buck Creek No.1 mine's proposed 3.8 million short tpa coal project.
Commenting on the completion of the Scoping Study, Paringa's President and CEO, David Gay, said: "The results of the scoping study further illustrate that the Buck Creek mine complex is without doubt the best undeveloped coal project in the highly sought after Illinois Basin. The Scoping Study has yielded extremely positive results, and if we knew from the outset what we know now, we would have always developed the No.2 mine first. The emergence of the No.2 mine has transformed the economics of the project and we are very excited about the enhanced strategy of creating a staged multi-project development by building the low capex No.2 mine first, followed by the No.1 mine."
The scoping study confirms that the Buck Creek No.2 mine has the potential for low capital development with total initial capital cost (capex) of only US$44 million. The company reports this is due to favourable geology and shallow depth of coal seam from surface at the proposed site.
As a result of the shallow depth of the WK No.9 coal seam from the surface at the proposed mine site and coal seam access area, the construction period to access coal at Buck Creek No.2 mine is anticipated to be approximately 12 months. Construction may begin as soon as the necessary permits are secured, and the current expectations for completing the permitting process to begin mine construction is approximately 12 to 14 months. According to Paringa, this short construction period together with streamlined and proven permitting process should allow the No.2 mine to start construction by 2Q17 and production by mid-2018.
The low capex, high-margin project is expected to achieve average earnings before interest, taxes, depreciation, and amortisation (EBITDA) of US$33 million per annum (steady state) with average annual total operating costs (steady state; inclusive of royalties and severance taxes) of US$32.94/ahort t Free On Board Barge at the project's barge load-out facility. This ‘all-in’ operating cost includes trucking costs from the project's coal handling preparation plant to the Green River barge load-out facility totalling US$2.14/short t.
Using the Buck Creek mine complex's coal resource estimate of 224.8 million short t of coal, the project can support production of 2.3 million short tpa ROM coal, yielding approximately 1.8 million short tpa of saleable clean coal at steady state production.
The scoping study has been prepared in accordance with JORC Code 2012 Edition (JORC Code) and National Instrument NI 43-101 'Standards of Disclosure for Mineral Projects' (NI 43-101).
Based on the scoping study results, Paringa will now develop the No.2 Mine first, followed by the ‘shovel-ready’ No.1 Mine, as part of a staged multi-project development strategy for building a new ‘mid-tier’, high margin Illinois Basin coal company.
Buck Creek Mine Complex is intended to ultimately become a strategic 5.6 million short tpa supplier of high-quality coal into the growing Eastern US power market.
Paringa has indicated it will expedite remaining technical studies at the No.2 mine, continue debt financing discussions and contract additional coal sales throughout 2016.
Edited from press release by Harleigh Hobbs
Read the article online at: https://www.worldcoal.com/coal/15022016/positive-scoping-study-results-for-the-buck-creek-no2-mine-238/