Immediately south of Xstrata Coal's proposed Wandoan open cut mine development and New Hope Coal's proposed Elimatta mine, Bundi’s construction is expected to begin in mid-2015, with first development coal at the end of 2016.

“The Bundi project scoping study has delivered significant independent information that confirms the technical viability of longwall mining in the Surat Basin,” the company said. “This, together with the positive project costings, provides MetroCoal with the confidence to proceed to a pre-feasibility study.”

Capital costs for Bundi are comprised of $662 million for the underground mine establishment, $298 million for CHPP and site earthworks and $34 million in other costs.

Total mine production will average 6.6 million tonnes per annum once steady-state operations are reached. A total of 163.3Mt would be extracted over the mine life.

A conventional retreat longwall technique will provide the most cost-effective method of extracting coal, according to the study.

Cut-offs were applied to the grid to selectively include or exclude areas based on a minimum seam thickness of 2.5m and maximum ash of 35%. MCS combined the seam thickness and ash cut-off criteria to determine the areas of best quality and practical mining height within the project boundary.

The relatively shallow depth of cover at the northern part of the mining area allows mine access by box cut and dual drifts for coal clearance and men and materials.

A longwall face width was assumed for the purpose of this study to be 350m, which is typical of new longwall systems in Australia but less than the maximum achievable values of up to 450m.

Financing of the capital cost of the rail and port is provided for in the rail and port tariff.

A Queensland government royalty of 7% up to a coal price of $100 per tonne, and 10% of the coal price per tonne thereafter, has been allowed for in the financial model.

The project has not been confirmed to be economic yet because there are no defined ore reserves, the company said.

MetroCoal chief executive Mike O’Brien said: “Completion of the scoping study for the Bundi project is the culmination of many months of technical evaluation.

“We are very pleased that the results confirm the project is financially viable. Work will now continue on environmental approvals and preparation of a pre-feasibility study.”