DFS HIGHLIGHTS ROBUST, LOW COST TELKWA PROJECT
Subsequent to our November 2018 update, Allegiance Coal (“Allegiance” or “the Company”) has completed a Definitive Feasibility Study (“DFS”) on its Tenas Metallurgical Coal Project (“Tenas” or “the Project”), located just 375 km by rail from the under-utilised Ridley Island Coal Terminal (“RICT”) in northwestern British Columbia, Canada – the study includes both base case and upside scenarios.
The base case presents a robust 22 year operation producing 750,000 tpa of clean mid-volatile, semi-soft coking (“SSCC”) or PCI coal with a low estimated up-front capital cost of US$90.5 million (including US$36.2 million of equipment finance leasing) and operating costs in the order of US$50/tonne of saleable product, potentially making Tenas the lowest cost producer in the seaborne metallurgical coal trade.
The upside case includes accelerated production and hence a shorter mine life, and results in a pre tax NPV of A$537 million as compared to the base case A$407 million – it needs to be stressed that this is currently only a hypothetical scenario. Permitting is predicated on the base case, and any changes to production will only be done with the full approval of all stakeholders.