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Allegiance Coal reports Telkwa stage 1 PFS results

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World Coal,

Back in July 2017, Allegiance Coal Ltd announced the results of the staged production pre-feasibility study (staged production PFS) of its Telkwa metallurgical coal project located in northwest British Columbia, Canada.

Following on from this, Allegiance has presented the results of the stage 1 pre-feasibility study (stage 1 PFS) along with its internal review of the staged production PFS. The stage 1 PFS assesses the viability of the Telkwa project assuming Allegiance is only ever permitted to mine at the rate of 250 000 saleable tonnes per annum. Like the staged production PFS, the stage 1 PFS was undertaken by SRK Consulting Inc. assisted by other mining and resources specialists.

According to a company release, the stage 1 pre-feasibility study reinforces the viability of the Telkwa metallurgical coal project as a stand-alone small mine operation positioned in the lowest five percentile of the global seaborne metallurgical coal cost curve.

Highlights of the stage 1 PFS include:

  • 250 000 tpy of saleable coal with a mine life of 19 years at an average strip ratio of 1.9:1 BCM/ROM t.
  • Average life-of-mine all-in FOB (ex-port) cash cost before tax of US$54/t.
  • All metallurgical saleable coal yield of 74%.
  • Life-of-mine average annual EBITDA of AUS$18 million at a ratio to revenue of 50%.
  • Unleveraged start-up capital expenditure of US$35 million.
  • Unleveraged NPV10% pre-tax of US$51 million with an IRR pre-tax of 32%.
  • The mine complex (equipment, wash plant and infrastructure) has a production capacity of 500 000 tpy of saleable coal that can be ramped from 250 000 tpy instantly (subject to permitting) with outstanding project economics.

Malcom Carson, Non Executive Chairman, commented: “It truly is a remarkable achievement that a bulk commodity mining operation can be so low down the cost curve without the benefit of scale and volume to drive unit costs down. It is rare for key cost drivers such as simple geology, exceptionally low strip ratio, good yield and excellent logistics to align in this way and deliver a coal project that can generate strong returns without scale and without the burden of major upfront capital. Allegiance is very fortunate the Telkwa metallurgical coal project is proving to be one such project”.

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Canada coal news