While coal prices have dropped recently, that hasn’t put Colonial Coal off their stride.
Last year, the company announced the results of its explorations in the Huguenot area, with an estimated 132 million tonnes of coal accessible via open pit mining, and 145.7 million tonnes of underground mining, giving the mine a projected life span of 31 years. That was up 50 percent over it’s previous estimates of reserves, which in turn were higher than earlier projections from 2013.
Late last month, they updated their Preliminary Economic Assessment (PEA). The new update doesn’t include updates on the coal resources, but takes a closer look at the feasibility of operating the mine. For the current study, the company has revised its conceptual mine plan to look at mining using only a stand-alone open pit, in contrast to the previous approach of a combined open pit and underground mine.
“This PEA for the stand-alone open pit mine on the Huguenot Project is preliminary in nature and there is no certainty that the forecast results stated in the PEA will be realized,” writes President David Austin in the announcement. “In addition, the PEA includes inferred mineral resources that are considered too speculative geologically to have the economic considerations applied to them that would enable them to be categorized as mineral reserves, and there is no certainly that the preliminary economic assessment will be realized. Furthermore, mineral resources that are not mineral reserves do not have demonstrated economic viability.”
Still, with that caveat, Austin says, depending on some factors (like whether they lease the equipment or purchase it outright), the operating cost of the mine would range from $55.08 to $61.47 per tonne. Add in other costs and the prices range from $91.90 to $98.29.
The company completed a more detailed analysis of the open pit design and equipment selection than previously, working with an assumption of a larger mineable open pit tonnage, longer mine life and a lower cost mining operation. “In addition,” says Austin, “alternative means of product coal transportation were considered which resulted in a revised plan to transport coal by conventional haul trucks from the mine to the existing rail line south of Tumbler Ridge, as opposed to the previous concept of direct rail transport from the mine. The trucking concept has the advantage of lower capital costs, lower risk and a shorter construction schedule than the rail option.”
This is not unheard of. When it was operational, Peace River Coal shipped its coal about 20 km from the mine to the nearest rail line. And, when they were starting up Conuma shipped coal from Brule to the Wolverine Loadout. Even now, it is trucked from the mine to the Willow Creek loadout, a distance of about 50 km.
For the estimate, the company worked on the assumption of producing about 2.7 million tonnes per annum (Mt/a), with a final output of about 72-million tonnes of recoverable coal, with a strip ration of 10.5:1.
This means that for each tonne of coal recovered, 10.5 tonnes of rock (or “overburden”) would need to be moved.
The mine would be in operation for 27 years, nearly double the predicted 13 years previously given. The previous PEA also identified a smaller open pit yielding 39 million tonnes of product coal.
David Austin founded Western Coal, which started the Wolverine, Brule and Willow Creek Mines, and was involved heavily in NEMI, which operated Peace River Coal. Colonial Coal is primarily focused on exploration and developing mines, and has been shopping its mines to potential investors and developers.
The company has been rumoured to be wooing Indian investors as potential developers of its Huguenot or Flatbed properties, a rumour that was given more legs last month, when they appointed Partha S. Bhattacharyya to the board of directors.
Bhattacharyya is the former Chairman and Managing Director of Coal India Limited, a coal-producing company headquartered in Kolkata (formerly Calcutta). “We are very excited and extremely honoured to have Partha join our Board of Directors,” says Austin. “I am very pleased that Partha has agreed to work with Company management and provide Colonial Coal with very sound and expert advice as the Company considers its various business development options going forward. We are very excited by what the future holds for our company and its shareholders and having Partha work with us now is a further testament to the value of our various business interests.”
