Logistics continue to plague Eagle Downs

THE biggest challenge facing Aquila Resources when it comes to developing its $A1.25 billion Eagle Downs coking coal property in Queensland, apart from the ongoing dispute with its partner Vale, continues to be logistics, with no route to port yet approved.
Logistics continue to plague Eagle Downs Logistics continue to plague Eagle Downs Logistics continue to plague Eagle Downs Logistics continue to plague Eagle Downs Logistics continue to plague Eagle Downs

The Eagle Downs project area. Courtesy Aquila Resources.

Staff Reporter

However, it hopes to hear within two weeks whether it has made the short list for the proposed Wiggins Island coal terminal and it said the Dungeon Point development represents another option.

The proposed Dudgeon Point project at the Port of Hay Point, 37km south of Mackay, will incorporate two or three new coal terminals and join Dalrymple Bay and Hay Point coal terminals to the south, to service the mines of central Queensland.

Aquila recently submitted an application to access the Dudgeon Point terminal, while capacity for Wiggins Island becomes available between 2015 and 2016.

Speaking at the company’s annual general meeting in Perth, Aquila general manager of coal Stephen Pilcher said a development decision was still pending on Eagle Downs but he was confident the logistics problem could be resolved.

Last month, the company suffered a setback in its dispute with Vale over Eagle Downs, with the Queensland Supreme Court upholding a Vale appeal against an Aquila injunction.

In September, Aquila won an interlocutory injunction restraining Vale’s wholly owned subsidiary Bowen Central Coal from voting on a resolution proposed by Vale in relation to Eagle Downs.

Aquila started legal proceedings last year after Vale unexpectedly pulled out of arrangements to secure 4 million tonnes per annum of port and associated rail capacity to export through Abbot Point in 2013.

In the subsequent dispute, Vale favoured developing the project before securing rail and port capacity.

Aquila wanted to secure the project’s logistics before going ahead with development – especially since it needed bank financing for its half-stake in the project.

At today’s AGM, Pilcher said $70 million had been budgeted for the coming 12 months on early project works at Eagle Downs, with a mining lease over the property granted in August.

Hosting reserves of 254Mt and resources of 959Mt, production at Eagle Downs would peak at 5.9Mtpa and average 4.5Mtpa from one underground longwall over its first 10 years.

However, there is potential for a second longwall capable of producing up to 8Mtpa from 2020 but it requires further investigation.

Meanwhile, at its Isaac Plain coal mine in the Bowen Basin, also 50%-owned by Vale, the company is targeting sales of 2.8Mtpa from mined volumes of 3.6Mtpa.

Assuming marketing responsibility for its share of production from the property, 80% of coking coal produced is now sold under contract versus the previous figure of 10%, while metallurgical coal continues to be sold on the spot market to Japan.

Around 70% of the coal produced from Isaac Plains comprises coking coal, while metallurgical or thermal coal makes up the balance.

As for the sale of its Washpool asset, it is expected to be finalised this month.

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