Colonial Coal International Corp. (TSX-V: CAD) President and CEO David Austin announced Sept. 24 the results of a recently completed Preliminary Economic Assessment (PEA) for the 100% owned Huguenot metallurgical coal project.
This mining project is located about 85 kilometers southeast of Tumbler Ridge in northeast British Columbia.
The PEA report, prepared by consultant Norwest Corp., was done under National Instrument 43-101 standards. The results of the PEA suggest that the Huguenot Project has positive economics and that it is worthy of continued exploration and development.
Norwest updated previously reported (2012) in situ and potentially mineable resources, developed a conceptual mine plan to exploit the coal resources through a combination of open pit and underground mining and prepared scoping-level cost estimates and economic analyses for the Huguenot Project.
Highlights of the report include:
- The Huguenot Project has an indicative after-tax (and royalty) net present value (NPV) of US$1.1bn at a 7.5% discount rate (a US$1.6bn NPV at a 5% discount rate) at a base-case coal price of US$192.50 per tonne (which includes contingencies on capital costs only).
- The project has a total projected mine life of 31 years, with the open pit (Years 1-14) and underground (Years 3-31) operating simultaneously during Years 3-14.
- Measured and indicated in-situ coal resources total 277.7 million tonnes (132.0 million tonnes surface mineable plus 145.7 million tonnes underground mineable) and represent an increase of 46.6% over previous estimates. Inferred resources total an additional 119.2 million tonnes (0.5 million tonnes of surface mineable plus 118.7 million tonnes underground mineable).
- The project’s potential coal production is identified as hard coking coal similar to coking coal currently exported from northeast British Columbia.
- The base coal price used (US$192.50 per tonne) represents a discount of US$7.50 per tonne from a projected long-term benchmark price of US$200 per tonne for premium mid-vol coking coal.
- The PEA economic analysis is based on a conceptual open pit mine plan targeting 56 million Run-of-Mine (ROM) tonnes of resource at an average stripping ratio of 8.6:1, plus a conceptual underground mine plan that targets an additional 66 million ROM tonnes of resource.
- The Huguenot Project has total projected clean coal production of 89 million tonnes over a mine life of 31 years.
- Projected clean coal production from combined surface and deep mining operations ranges from 1.4 million tonnes per annum to 5.9 million tonnes per annum.
- Projected clean coal production from the open pit averages about 3.2 million tonnes per year in Years 1 through 12 and 1.8 million tonnes per year from underground from Years 5 through 31.
- The project’s proposed payback of initial capital is estimated at eight years after start-up.
- The project’s cash operating costs are estimated at US$77.84 per tonne clean coal (capital cost contingency only) at the mine loadout. This figure increases to US$89.52 per tonne clean coal if an operating cost contingency is also applied.