CEAA seeking comments on Carbon Creek

THE Canadian Environmental Assessment Agency has put out the call for public comments regarding Cardero Coal’s Carbon Creek metallurgical coal project in northeastern British Columbia, Canada.
CEAA seeking comments on Carbon Creek CEAA seeking comments on Carbon Creek CEAA seeking comments on Carbon Creek CEAA seeking comments on Carbon Creek CEAA seeking comments on Carbon Creek

Carbon Creek

Donna Schmidt

The CEAA is seeking to determine whether a federal environmental assessment is required for the project as part of the Canadian Environmental Assessment Act of 2012 installed to support the government's Responsible Resource Development Initiative.

All written comments are due by February 4. The agency’s final decision on whether the assessment is required will be posted on its web site.

If it decides in the affirmative, the CEAA said that three further opportunities to comment on the project will be held as mandated under law.

In related Carbon Creek news, Cardero said Monday that it has entered into an agreement to extend the option exercise period for the takeover of four coal licenses that form a portion of the complex.

The extension will last for up to three calendar months, through April 13.

Previously, the company was required to exercise the option on or before January 14 by forwarding $C5 million and issuing 400,000 common shares.

Under the new terms, Cardero agreed to pay a non-refundable deposit of $1 million on January 14, with the balance of $4 million due along with 400,000 shares upon its exercise of the option.

An extension fee of $20,000 monthly will also apply.

To date, the company has made the initial $1 million interim payment and the first $20,000 payment to extend the option.

"Renegotiation of the option terms allows the Company to postpone full payment for the coal licenses while we finalize terms and subsequently close the Sprott loan facility, originally announced in October 2012," president and chief executive officer Michael Hunter.

“The loan facility is tied to the equity financings, which Cardero closed on December 31, and closing of the debt facility is expected in the coming weeks. When we complete the acquisition of the coal licenses, Cardero will have a 100% working interest in this excellent asset.”

A November 6 feasibility study report from Norwest confirmed the deposit’s M&I resource at 468 million tonnes, up from 166 million tonnes.

Carbon Creek’s established initial proven and probable reserves are 121Mt, pointing to an initial mine life of 20 years.

The report also found that, based on the results, the average clean coal production rate could be estimated at 4.1Mtpa, up notably from a prior projection of 2.9Mtpa between 2016 and 2034.

Over Carbon Creek’s lifetime, coal production is expected to be about 78.4Mt, with 60% of planned output classified as hard coking coal. A previous estimate for HCC was 35%.

Norwest provided some good financial news to Cardero as well: that pre-production capital projection had been reduced from $C301 million to $217 million.

Including pre-production capital, it will take capital of $475 million to bring the project to full production.

Once in operation, operating costs should average $110/t, down from $114 on previous projections.

Carbon Creek should have first coal by the first quarter of 2014 and be cashflow-positive within three years.

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