Dependent on market conditions, the company considered either a 2.4Mtpa second-hand longwall or installing a new 4Mtpa longwall for the mine, 87km from the port of Newcastle. Since the company’s November listing, in which it raised $A44 million, market demand and coking coal prices have continued to increase, making the expanded case attractive.
Resource Pacific is now seeking $A21.9 million from shareholders in a two for five non-renounceable rights issue, priced at $A1. Institutions will pay the same price to participate in a separate share placement, raising a further $A43 million. The balance, $A115 million, will be debt funded, provided by BNP Paribas and ANZ.
The company's expanded case mine plan involves continuing bord and pillar mining of the Pikes Gully Seam through December 2006, by when the first longwall panel will be developed and ready for extraction. Longwall mining from January 2007 is planned for Newpac's Southern Block, continuing to 2014 through the currently mined Pikes Gully seam, then transferring to the underlying Liddell seam, and finishing with the Lemington seam.
The seams within the proposed mining area generally range between 2-3m in thickness, and occur at cover depths between 160-315m.
In addition, the company plans to upgrade surface infrastructure including recommissioning the coal preparation plant and establishing new stockpiles.
"The integration with new coal handling and preparation facilities will make this a very efficient and cost effective mine. We are pleased to offer our shareholders the opportunity to share in the company's growth prospects," said company chair Carol Holley.
"We are now moving to the next stage of the company's growth," managing director Paul Jury said.
"The expanded case plan allows us to mine this world-class resource more efficiently. Current bord and pillar mining operations will continue uninterrupted."
The mine currently produces around 900,000 tonnes per annum of semi-soft coking coal from bord and pillar operations. Jury also said coal sales remained strong and the company had already established sales contracts with major steel mills for its forecast production in 2005-06.
The company had entered into fixed price contracts for delivery of the longwall equipment and associated infrastructure, minimising the completion risk to the company, Jury said.
These include a $A69.4 million contract with DBT to supply and commission the longwall equipment; a $A71.9 million contract with Roche Mining to supply and commission ROM coal handling systems and to refurbish the prep plant; and a $A18.2 million contract with Nepean Conveyors to supply and commission a coal clearance system. GHD will project manage the mine development and contracts for $A1.9 million.