Cardero ups resource estimate, production target for coal mine

Cardero Resource Corp. (TSX: CDU)(NYSE MKT: CDY)(NYSE Amex: CDY)(FRANKFURT: CR5) has received the final Prefeasibility Study (PFS), compliant with Canadian National Instrument 43-101 standards, for its Carbon Creek coal deposit in northeast British Columbia.

The technical report, from consultant Norwest Corp., is dated Nov. 6 and has an effective date of Sept. 20. Among the highlights of this report: pre-production capital has been reduced to US$217m from US$301m; the percentage of hard coking coal increased to 60% from 35%; average clean coal production rate increased to 4.1 million tonnes per year from 2.9 million tonnes per year over the 2016-2034 period; and the measured and indicated resource increased to 468 million tonnes from 166 million tonnes.

Total clean coal production is currently estimated at 78.4 million tonnes over the mine life. There has been a reduced operating cost from US$114 to US$110/tonne FOB. First coal production is planned for the fourth quarter of 2014.

The CN Rail line connecting Fort St John and Tumbler Ridge areas with Prince George passes 40 kilometers south of the property. The CN Rail line provides direct access to the ports of Vancouver and Ridley Terminals in Prince Rupert, BC. The northern end of the property is adjacent to the Williston Lake and is about 175 kilometers east of Mackenzie, BC, by water.

Cardero is conducting a multi-rig exploration program during 2012, targeted at expanding the measured plus indicated resource base and further defining potentially mineable areas within the previously defined resource areas.

The coal from Carbon Creek will likely fall into two main logical groups: mid-vol and high-vol bituminous coals. Most of the mid-vol coals seams, i.e. the lower seams 14, 15, 27, 31 and 40, will be marketed as hard coking coals. While Seam 40 is currently included in this group, the most recent analytical, petrographic and carbonization results indicate this may be a semi-soft coking coal, the new report said.

The nature of the geology of the Carbon Creek Project lends itself to several mining methods, including 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. Notable is that deep mining is fairly unusual in the British Columbia coal business.

Cardero, headquartered in Vancouver, is focused on coal and iron ore, and its two primary properties include the Carbon Creek (metallurgical coal) and Sheini Hills (iron ore). The Carbon Creek deposit is located in the Peace River coalfield in northeastern British Columbia.

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.