Cardero outlines plans for several types of Carbon Creek mining

Cardero Resource Corp. (TSX:CDU) (NYSE MKT: CDY) (NYSE Amex: CDY) (FRANKFURT: CR5) on Sept. 23 released the results of a Prefeasibility Study (PFS) for the Carbon Creek metallurgical coal mining project, located in northeast British Columbia, Canada.

Cardero COO Angus Christie said: “I believed when I joined the Company that we had an opportunity to turn the Carbon Creek asset into one of the largest producing, lowest cost operators in the region. This report demonstrates that we are in position to turn our expectations into reality and establish this asset as the benchmark against which other developments in the region will be evaluated.”

President and CEO Michael Hunter added: “I am very pleased to see this project be advanced on schedule and below the pre-production capex outlined in the 2011 preliminary economic assessment. The results demonstrate the remarkable skills of a management team that has worked tirelessly on our shareholder’s behalf. The task in front of us is to continue to stay on schedule and on budget as we prepare ourselves for a planned production commencement in Q4 2014.”

Consultant Norwest Corp. is preparing a National Instrument 43-101 (NI 43-101) Technical Report and PFS on the Carbon Creek deposit. The effective date of the PFS is Sept. 20 and for the updated resource estimate is Sept. 5. The final version of the Norwest report will be filed in Canada and made available through the company’s website within 45 days of this news release.

Carbon Creek has an estimated 468 million tonnes (Mt) of in-place coal resources in the measured and indicated categories plus 232 Mt in the inferred resource category.

The nature of the geology of the Carbon Creek lends itself to employing several mining methods. The proposed mining methods include underground room and pillar mining with continuous miners, surface contour and area mining using hydraulic excavators and trucks, and highwall mining. After a short ramp up period, all mining methods will be employed concurrently throughout the 20-year mine plan. The projected average clean coal full production rate is 4.085 million tonnes per annum (Mtpa) through mine life (2016 to 2034). Peak production of 5.1 Mtpa is to be achieved in 2022.

The underground mining operations are projected to have two sets of portals about three kilometers north of Seven Mile Creek and three sets of portals about two kilometers south of Seven Mile Creek. Notable is that underground coal mining is very unusual in British Columbia, where surface mining is the norm. Highwall mining will occur throughout the surface mining areas along the outcrops of the various seams after contour mining has taken place.

Surface contour mining will begin first in 2014 simultaneously in the North and Central areas which will allow areas for highwall and underground mining to be developed. Surface contour mining will continue throughout the life of the mine. Surface area mining will commence in 2016 in both the North and Central areas of the mine and will also continue for the life of the mine. Highwall mining will also commence in 2016 in both areas of the mine. Underground mining will commence in 2016 in the North area of the lease with one continuous miner (CM) unit operating and ramping up to six CM units by 2019.

Big new prep plant to replace initial starter plant

The planned Coal Processing Plant (CPP) will be a single-module operation rated at a nominal 1,200 tonnes per hour (tph) of raw feed and feature parallel, size-specific processes. The plant will be robust in design with targeted run of mine coal throughput of 7.2 Mtpa at a 68% effective utilization. A small temporary plant will be established to support first coal production anticipated in 2014 and early 2015.

The coal from Carbon Creek will fall into two main groups: mid-vol hard coking coal (HCC) and a mix of non-HCC mid-vol and high-vol bituminous coals. The coal seams above Seam 40 will be targeted as either semi-soft or pulverized coal injection (PCI) products depending on market pricing at the time of production. Of particular note are Seams 46 and 47. These mid-vol coals are very low ash and may be suitable candidates for a premium PCI market owing to their relatively high fixed carbon content, Cardero noted.

Power for the mining operation will be fed via a BC Hydro power line from the electricity supply facility at the WAC Bennett Dam. Maximum power demand will range from 8 MW at the commencement of the mine to approximately 25 MW at full production.

Initially, delivery of coal from mine site to rail head was by truck southward from the mine, delivering coal to a proposed rail loadout 69 kilometers (km) to the south. Detailed analysis of the route as part of the current Prefeasibility Study identified a number of potential risks. In particular, the truck route required completion of the infrastructure ahead of first coal shipment, which offered no opportunity for reduced preproduction capital and no tolerance for construction delays. As a result, several transportation options were considered for the PFS.

A decision has now been made to utilize Williston Reservoir as a barge transportation route, delivering coal to the railhead at the town of Mackenzie. The proposed barging route covers a distance of about 175 km. At Mackenzie, coal would be off-loaded to the existing rail head and transported by rail to port.

Norwest outlines needed next steps

Norwest has provided a number of recommendations for additional work, leading to completion of a full feasibility study, including:

  • Development Drilling – The results of the 2012 drilling program should be included in the geological database and a new geological model produced for the Feasibility Study.
  • Mine Planning Refinement – Additional refinement of the geologic model along with a detailed mine plan is recommended. This work should be completed at the feasibility level of project evaluation. Optimum production plans and methods should be analyzed. One example for further study is to examine the applicability of underground longwall mining rather than room and pillar mining.
  • CHPP Design and Construction – Before proceeding with detailed design and construction, Norwest recommends more studies to better characterize the coals to ensure proper equipment design.
  • Washability Study – Utilizing with large diameter core drilling which is in progress as part of the 2012 field program.
  • Seam Characterization – Further metallurgical characterization of main seams and potential blends.

The Carbon Creek property is about 40 km west of the town of Hudson’s Hope and 60 km northwest of the town of Chetwynd. Improved forest service roads connect it with British Columbia Highway 29 between Hudson’s Hope and Chetwynd. A CN Rail line, which will be used to deliver the product to Ridley Terminals at Prince Rupert, passes 40 km south of the property.

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.