These bids were received as a result of an extensive six month contract negotiation and bidding process for all major capital items including site development, electrical substation and infrastructure, slope (decline) construction, shaft excavation, mine fan and escape hoist, surface facilities, coal preparation plant, materials handling, overland conveyor belt and barge load-out facility.
Due to the competitive bidding process between several highly experienced contractors, there will be a significant saving to the initial total capital estimate used in the pre-feasibility study for Buck Creek No.1 mine, according to the company.
This is an indication of the availability of highly experienced coal industry contractors and the competition among contractors to win mine development work in the Illinois Basin, Paringa CEO David Gay said.
“This is an outstanding outcome for Paringa and the result of long and hard work from our US management team. We are looking forward to continuing discussions with potential financiers this year and have received exceptional feedback since announcing our cornerstone coal sales agreement with LG&E and KU.”
The Buck Creek No.1 mine is located in one of the best-serviced and infrastructure advantaged coal regions in the US, according to Paringa.
All construction services, construction personnel, contractors and parts will be supplied by firms who are operating in the region.
Capital costs for the Buck Creek No.1 mine have been benchmarked against similar underground mines in the region that mine the project’s WK No.9 coal seam in similar conditions, utilising identical mining and processing techniques and equipment.
In addition, the capital intensity (inclusive of leased equipment) of the Buck Creek No.1 Mine is similar to other new coal developments in the Illinois Basin by public listed companies that have started construction since 2007.
Final bid awards and construction contract executions will align with the completion of formal negotiations with financiers to develop the Buck Creek No.1 mine.
Results of the final construction bidding process including a detailed breakdown of major capital items and comparisons to the total initial estimate used in the PFS, will also be incorporated in the bankable feasibility study which is due to be completed during the current quarter.