Cardero Resource Corp. (TSX: CDU)(NYSE MKT: CDY)(FRANKFURT: CR5) on Aug. 15 updated its coal quality results from the flagship Carbon Creek Metallurgical Coal deposit in western Canada.
Cardero has completed 42,000 meters of drilling and coal quality sampling over the past 24 months. Compilation and analysis of the extensive coal quality database has been completed. Simulated product specs have been completed and supplied to consultant Wood Mackenzie who completed a comprehensive benchmarking study, examining how Carbon Creek met coal products fit into the existing global seaborne met coal market. The results of Wood Mackenzie’s analysis are positive, Cardero noted.
Based on the coal quality data supplied to Wood Mackenzie by Cardero, the following conclusions from the Study are particularly relevant:
- Both the Hard Coking Coal (HCC) and Semi-Soft Coking Coal (SSCC) are close to benchmark specification. Indicative metallurgical product coal quality is positive.
- Carbon Creek’s HCC will be marketed as a Mid-Vol HCC, based on average Volatile Matter (VM) content of 27%, Coke Strength after Reaction (CSR) of 60 to 65 and Rank of 1.1% RoVmax.
Overall, project fundamentals are positive. In particular, ash contents are low, which is very desirable for blending coals.
Carbon Creek’s PFS predicted an operating cost of C$110/tonne, which in nominal dollars (taking account for inflation) is predicted to be C$116/tonne in 2016. This places Carbon Creek in the upper half but close to mid-way in the global cost curve at the 46th percentile.
Currently the met coal market as a whole is seeing a slight oversupply, but additional mines need to come online by 2022 to address expected future supply shortfalls, Cardero said. Quarterly pricing for HCC has dipped below marginal production cost, reaching the 90th percentile on the global cost curve, and prices are expected to bottom during the third quarter of 2013.
Carbon Creek is an advanced development project located in the Peace River Coal District of northeast British Columbia, Canada. The project has a current reserve of 121 million tonnes, included within a 468 million tonne measured and indicated resource, of ASTM Coal Rank mvB coal.