Stanmore ready for 2014 production

STANMORE Coal is on track to begin coal production by 2014 after exploration in the September quarter at its Mackenzie River and The Range project areas in central Queensland continued to prove up the resource.
Stanmore ready for 2014 production Stanmore ready for 2014 production Stanmore ready for 2014 production Stanmore ready for 2014 production Stanmore ready for 2014 production

Stanmore Coal's projects.

Lou Caruana

The 100% -owned Mackenzie River coking coal project, west of Blackwater, now has an initial JORC inferred resource of 99 million tonnes.

The resource has been established down to a 100m depth cut-off within the Aquarius seam of the Burngrove formation.

“The defined 99 million tonne JORC inferred resource reaffirms Stanmore Coal’s view that the Mackenzie River project could potentially support a substantial open pit coal‐mining operation,” the company said.

Stanmore has established an additional exploration target of 70-80Mt within the Leo seam and other parts the Aquarius seam at the project area.

“Stanmore Coal will continue to drill up the project with the aim of increasing JORC tonnage and then move to undertake a conceptual mining study to firm up mining methods and the path to production,” the company said.

The seams run in a general north‐south direction over an approximate 25-kilometre strike length within the western part of the Mackenzie River project area and dip towards the west at about two degrees.

The limit of weathering ranges from 19m to 49m depth across the resource area.

Stanmore has determined a cumulative coal thickness within the Aquarius seam averaging 2.2m across the entire deposit, making it potentially suitable for open cut mining.

Completed product coal quality analysis in the southern part of the deposit suggest the coal seams may be washed to produce a coking coal product.

Stanmore is exploring the use of a two-stage wash to maximise the yield and coking properties of the coking product. Laboratory results to date indicate the potential for a 10‐12% ash coking product along with a secondary product of thermal coal.

The Mackenzie River project is ideally located for export as it lies on the rail line to Gladstone between the existing Ensham and Curragh operating mines and adjacent to the Washpool project being developed by Aquila Resources, which is also targeting the Burngrove formation.

Stanmore’s conceptual mining study of The Range - which was completed during the quarter - should confirm that the project is able to move from an exploration to development stage.

The Range project is located 24km southeast of the Wandoan township, within the Surat Basin coal province. Covering about 90 square kilometres, it is near existing key infrastructure and the upcoming Surat Basin Rail link.

Minserve completed the conceptual mining study for The Range project following Stanmore’s July 26 announcement that an additional drilling program at The Range had defined an increased JORC inferred resource of 219Mt (previously 208Mt) of high‐quality thermal coal.

Key findings of the Minserve study indicated a viable 5Mt per annum open pit conventional operation with an 18‐year mine life from 2015 to 2032. The study also indicated a high‐quality 10‐12% ash thermal coal product suitable for export.

The study considered both owner-mining and contractor-mining options, indicating that both are likely to be economically and technically viable.

Subject to statutory approvals being attained and the outcomes of further studies at the site, construction work is planned to start in the second quarter of 2013, with first coal production targeted for the first quarter of 2015.

The study found that The Range project has sufficient room within the EPC to accommodate the required out-of-pit waste dumps, tailings dams and mine facilities.

The evaluation conducted as part of the study indicates a net present value of $298 million can be achieved for the owner-mining case with an assumed coal product sales price of $US95 per tonne and nominal discount rate of 11.5%.

The development capital cost could be as low as $A299 million for the contractor-mining case, through to $502 million for the owner-mining case.

The operating cost estimates based on the owner/operator case were approximately $46/t to the rail head and $85/t free on board.

A number of opportunities to improve the operating costs and project economics have been identified and these will be examined in future studies.

“Stanmore Coal is continuing to work effectively with all stakeholders as it progresses The Range towards production,” the company said.

“A number of options for the location of a coal handling and preparation plant and other key infrastructure have been identified during the conceptual mining study. Stanmore Coal is in discussion with proponents of coal seam gas pipelines which potentially pass through the EPC.

“Stanmore Coal is in discussions with these proponents to determine routes which accommodate all parties’ requirements.”