The extra acreage will be built into the pre-feasibility study mine plan for the Buck Creek No 1 mine, with direct access to the lucrative Ohio River market.
Paringa CEO David Gay said the company’s successful leasing program had significantly de-risked the development of the Buck Creek No 1 mine and paved the way for a substantial expansion to the PFS mine plan.
“We have an exciting six month period ahead with the JORC coal resource estimate update, PFS results for Buck Creek No.1 Mine and results from the Buck Creek No 2 mine technical study,” he said.
“The Buck Creek Mining Complex is truly the last remaining large-scale, undeveloped coal deposits in the Illinois Basin with direct barge access to the Ohio River market.”
Paringa has 402 individual leased mineral tracts within the 33,500 acres it controls, which is 75 mineral tracts more than it had when it released its maiden coal resource estimate in November 2013.
Paringa also holds options to purchase approximately 540 acres of surface land to be used for the surface facilities of the underground mine, preparation plant, refuse disposal site and barge loading facility.
The new lease position will assist with an upgrade to the JORC Coal Resource Estimate for the Buck Creek Mining Complex later this month.
The proposed Buck Creek No 1 and No 2 mines will be next to the Green River, providing year-round linkage to the Ohio and Mississippi rivers systems that feed low cost base-load domestic coal-fired power plants.
The proposed target market for the mines’ coal will be the Ohio River market consisting of large, scrubbed, base-load power plants.
Paringa reported that feedback from discussions with domestic utilities had confirmed there was demand for other independent sources of coal in the Ohio River market to increase the diversity of local supply.
“The strong market fundamentals for Illinois Basin coal are underpinned by the substantial growth in US scrubbed coal-fired power plant capacity, with Illinois Basin demand forecast to increase by more than 50% to 202 million tons from 2013 to 2020,” Paringa said.
The PFS for Buck Creek No 1 is set for completion during this quarter, with the technical study for Buck Creek No 2 due in the September quarter.
Paringa anticipates cash flows from the proposed Buck Creek No.1 Mine to assist the development of the low capital cost Buck Creek No 2.
“Continuation of Paringa’s successful leasing program will underpin ongoing technical studies at the Buck Creek No 2 mine and assess the potential for a third mine development,” the company said.
“Significant scalability exists within the Buck Creek Mining Complex to increase annual coal production from the proposed current steady state production rate of 3.4 million tons of saleable coal per annum at the Buck Creek No 1 mine [per the scoping study released in February 2014].”
The Buck Creek Mining Complex is unique compared to many other US coal properties as its surface property owners also generally own the mineral estate – including the coal.
That means the Buck Creek Mining Complex consists of many individual mineral leases of varying size and complexity requiring time and resources to research, negotiate and lease.
This unique mineral ownership means the community has a vested interest in the success of the mining operation.
Paringa said the complex nature and scale of those lease properties was “the key factor” in the Buck Creek Mining Complex not being previously consolidated and developed by local US coal producers.