Australia-based Atrum Coal NL (ASX: ATU) on Jan. 28 provided an update on recent activity related to exploration of its Groundhog Anthracite Project in British Columbia, Canada.
This announcement was an update to the ASX announcement made by the company in August 2015: “Atrum Coal Increases Groundhog North Resource.”
The company said Jan. 28 that it has received very encouraging anthracite quality results from drilling at Groundhog’s Eastern Resource block. The Duke E seam, one of the primary target seams for the underground mines designed in the Groundhog North Mining Complex, has returned yields averaging above 80%, producing a premium 10% ash ultra-high grade anthracite. The company’s previous economic analysis has been based on Duke E yields of 60% for the 10% ash product. An increase in yield will have a positive impact on the economics of the project, which will be reflected in the Groundhog’s Pre-Feasibility Study.
Robert Bell, Atrum executive chairman, said: “As we gain a greater understanding of the Groundhog resource base, we increase the likelihood of designing mines with both reduced operating and capital costs. The delineation of the Duke E seam in the Eastern Resource block with much higher washing yields is an encouraging result, and is likely to strongly influence our mine planning and development scenarios. Taking the average yield of the Duke E from 60%, to above 80% could result in a significant reduction in the total cost of production as [run of mine] coal volumes are significantly reduced to produce the same volume of premium product.
“Furthermore, the Duke E in the Eastern Resource block is shallowly emplaced, with average depths less than 150m, and it is consistently >2m thick – an ideal mining height underground. Moving the yield from 60% to 80% has potential to reduce the ex-mine cost by 20%-25%, and the FOB cash cost by 10%-15% for our primary export product, a low ash, ultra-high grade anthracite which is in short supply on global markets.”
Exploration activities in 2015 focused on consolidating knowledge of the two key economic targets, the Discovery B seam and the lower Duke E seam within the Groundhog North Mining Complex.
The company is currently re-working a Pre-Feasibility study (PFS) which includes underground mines in the Discovery B and Duke E horizons, and low-cost highwall options in the Discovery B seam. Improved float sink yields are being investigated, and the coal quality database divided into zones of geological influence, termed the Eastern Resource block, and the Western Resource block. The quality results have been sent to third party consultants to undertake wash plant simulations to predict primary and secondary yields from the designed washery. Should these simulations return expected results of primary yields for the Duke E seam of between 75% and 80%, it has the potential to reduce the overall cost of production from the Duke E seam by 10%15%. Furthermore, these yields come from the Duke E seam at average depths of under 150 meters, which has the potential to significantly reduce the capital cost to access the Duke E seam underground. The Company has identified two suitable entries accessing the seam at depths of about 40 meters, significantly shallower than previously planned.