Vickery is currently 49% owned by Itochu, which is believed to be keen to establish offtake agreements with Whitehaven to ensure security of supply of its high-quality thermal and coking coal.
“There are compelling operational and economic benefits from combining these two assets and Whitehaven is discussing with Itochu how that might be achieved commercially,” Whitehaven said.
Mine planning for the Vickery project has so far generated a pit design that produces 164 million tonnes of ROM coal at a stripping ratio of 10:1. Work is progressing to define an open-cut mine plan for Vickery to produce around 4.5Mtpa ROM for more than 25 years.
Coalworks commissioned a prefeasibility study at its Vickery South coking and thermal coal project, for which it also made a strategic land acquisition to position the project for infrastructure access, with production expected to commence in 2015.
The prefeasibility study found that an open cut truck and shovel operation producing 3Mtpa ROM coal with a 16-year mine life was viable. It would produce a total of 43.2Mt ROM coal, with 30Mt being semi soft coking coal and 6.3Mt of thermal coal.
Coalworks has identified a 58.5 Mt JORC compliant bituminous coal resource, which includes 48Mt measured, 0.1Mt indicated and 10.4 inferred resource at Vickery South.
“With regards to Vickery South, Whitehaven intends to analyse its optimal development path, taking into consideration Whitehaven’s Vickery project,” Whitehaven said in its bidder’s statement.
With Whitehaven’s Tarrawonga coal to be processed and railed from the new Idemitsu Boggabri plant in future, Whitehaven’s Gunnedah CHPP and rail loading facilities are available for Vickery.
The current development plan for Vickery involves trucking ROM coal to Gunnedah CHPP for processing and loading, as is currently in place.
“This is an efficient use of existing infrastructure and a relatively low capital cost development of Vickery,” Whitehaven said.
Ongoing analysis of Vickery coal quality indicates that, if all ROM coal were washed, saleable coal yield would be more than 80% of predominantly low-ash, low-sulphur and low-phosphorus semi-soft coking coal.
This saleable coal yield can be increased significantly by by-passing a proportion of low-ash ROM coal, as is done with Whitehaven’s Tarrawonga coal.
This will provide the Vickery project with a high degree of flexibility in producing metallurgical or premium thermal coal, depending on market conditions from time to time, the company said.