Attractive Metallurgical Coal For Steel Making Confirmed
Stanmore Coal Limited (ASX:SMR) reports that the Bankable Feasibility Study (BFS) is now completed for the Isaac Downs Project in Queensland.
Isaac Downs is the development of a satellite operation for the Isaac Plains Complex, with low capital costs, producing 2.5Mtpa1(saleable), of primarily coking coal, resulting in a favourable economic outcome of A$215M NPV (IRR 139%).
This development supports the continuation of operations at the Isaac Plains Complex by providing a new source of ROM coal to feed the Isaac Plains CHPP.
The recommended outcome of the BFS study, led by Palaris Australia Pty Ltd, is to proceed to the development stage for the Isaac Downs Project utilising the existing Isaac Plains infrastructure (including the CHPP and train loadout) and the long-term port and rail logistic agreements already in place with Stanmore.
Products to be produced from Isaac Downs are primarily 9.1-9.5% ash1 high quality semi-soft coking coal with a secondary product of 16% ash thermal coal. In addition, the same coal seams can produce a semi-hard coking coal specification at 8.5% ash which may result in improved realisations and margins depending on the coal price relativities for different products.
The Isaac Plains Mine has been in operation for 14 years building a strong customer base of Asian, Indian and European customers and has developed a reputation as a consistent and reliable supplier from a volume and coal quality perspective. Stanmore now generates 95% of its product coal for key steel making customers.
The longer-term coking coal demand forecast is expected to be robust with India and South-East Asia forecasted to generate strong demand for finished steel. This drives the requirement for coking/steelmaking coal supply, with Australia being the dominant supplier to the worldwide seaborne trading market. 1
The BFS study programme provided the relevant information and mine planning to define Coal Reserves under the 2012 JORC Code which defined 25.9 Mt of recoverable coal (ROM), of which 22.3 Mt was categorised as Proved Reserves and 3.6 Mt was defined as Probable Reserves.
The technical assessment included detailed examination of all modifying factors listed under the JORC Code involved with developing this resource, with no material flaws or impediments to development noted.
Under the BFS mine planning scenario, the initial Isaac Downs box-cut will be established where the coal seam is close to the surface topography using an excavator and truck operation at low strip ratios.
Subsequently, the dragline will be ‘walked’ from Isaac Plains to Isaac Downs and a standard Bowen Basin dragline operation will be established from north to south, supported by excavator and truck pre-strip operations. This will provide a cost-effective solution for the mining operation. The estimate of operating cost forecasts is based on current contractual arrangements at the Isaac Plains mine.
As Isaac Downs will be developed as a satellite operation for the Isaac Plains Complex, the new mine does not require capital for a coal handling and preparation plant (CHPP), nor rail loading facilities. The major infrastructure required for Isaac Downs is:
- New haul road connecting Isaac Downs to the CHPP at Isaac Plains (~12km);
- A bridge to allow the haul road to pass under the Peak Downs Highway;
- A new access road to Isaac Downs from the Peak Down Highway;
- Water management infrastructure;
- Site drainage infrastructure;
- A flood protection levee to protect the mine from Isaac River flood waters (designed for up to a 1
- in 1,000 year event);
- A mine infrastructure area (MIA) including crib facilities, car and bus parking, dome type
- workshops, storage, heavy and light vehicle wash downs, fuel and lubricant storage, waste storage etc;
- Secure explosives magazine and reload areas; and
- Power supply connecting Isaac Downs to Isaac Plains (including MIA, lighting, pumps and dragline supply).
Stanmore has developed a capital cost estimate with substantial contractor involvement. Civil cost estimates have been developed by an experienced civil contractor under an ECI agreement. The mine requires a A$63M capital investment for the construction activities to establish the site infrastructure.