Straits' grand plans for Sebuku

STRAITS Asia Resources has completed a detailed scoping study for potential mining of the coal resources on its western leases located between Sebuku and Laut Islands southeast of Borneo in Indonesia.
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Straits Resources' Sebuku coal processing facility

Blair Price

The scoping study over the company’s western leases did not cover a new area, north-west of Sebuku Island, currently being drilled.

Drilling is anticipated to be completed early next year when Straits expects to bring resources to an indicated status based on a minimum seam thickness of 0.3m. Open cut mining methods will be used.

Initial mine studies show a stripping ratio of 7:1 and the product to be of a similar grade to Sebuku.

“While the average thickness of the main 197 seam over the entire resource area is 8 metres the total coal sequence averages 18 metres,” Straits said.

The study sets out a stand alone mining operation with Straits aiming for a coal production capacity of 20 million tonnes per annum for a 20-year mine life.

However, the western leases present challenges as they cover shallow water in the Sebuku Strait.

Straits’ approach is to use “mining cells” behind a series of constructed bunds.

“Engineered bunds to enable the extraction of submarine resources are technically well understood, not unique and are widely implemented globally,” the company said.

“Bund construction time is expected to be less than twelve months for each mining cell, with material for bund construction sourced from existing mining operations.”

Other infrastructure includes another coal wash facility, which combined with the current two washplants will give the company 8 million tonnes of capacity for 2009, along with a coal-fired power station, overland conveyors and a marine conveyor linking to a dedicated offshore ship loading facility.

Straits will spend $US860 million over the mine life and site cash operating costs are forecasted to be $US24 a tonne, excluding royalties.

Under a long term sales price of $US80/t, Straits calculates the net present value of the cash flow before tax to be $US2.7 billion, which it considers very competitive.

“Sebuku continues to show its increasing value to Straits Asia and its longer term potential,” Straits Asia chief executive Richard Ong said.

“This study, which follows hard on the heels of our announcement of extension of the western leases, shows that our team is fully capable of unlocking real value from the Western Leases, value that will be passed to shareholders once mining begins.”