The bucket wheel excavator system for overburden removal has materially lower capital and operating costs and a higher rate of coal production than the concept study open cut case and is the highest value alternative, the company said.

“The significant reduction in operating costs compared with the initial concept study primarily relates to the cost of overburden removal for the BWE,” the company said. “The continuous excavation system of the BWE is able to efficiently remove 50% or more of the overburden, replacing a large fleet of shovels and trucks.”

The effectiveness of the BWE system is dependent on the overburden characteristics, which must be soft and weak to enable free-digging. Carabella’s assessment of the geotechnical conditions at Grosvenor West concluded that the overburden is amenable to free-digging to a depth of at least 70m, it said.

Below that depth, excavators and trucks will be used for overburden removal and coal mining.

“Further advantages of BWE system include the ability to operate effectively in wet weather conditions as well as negating the need for drill and blast operations,” the company said.

While the concept study assumed 100% owner-operated mining, the preferred mining option envisages contracted mining services, substantially reducing up-front capital requirements for mining equipment.

The preferred mining method delivers a material increase in the overall value proposition with significantly improved funding potential. The company plans to submit a mining lease application in August 2012 and to commence a feasibility study with expected completion by September 2013.

The proposed use of contractor mining for coal extraction reduces the estimated capital to $500 million.