In October 2015, Paringa signed a coal sales agreement with LG&E and KU to deliver coal from the No.1 Mine. In February 2016, the company decided to develop the No.2 Mine first following exceptional results from a Scoping Study which demonstrated the No.2 Mine to be a high margin 1.8Mtpa mine with low capex of only $US44 million.
As a result, the amended cornerstone coal sales agreement with LG&E and KU now reflects delivery of coal from the No.2 Mine.
The amended contract is on substantially the same terms as the original contract.
Coal volumes and coal specifications remain unchanged. Fixed sale prices have changed slightly to reflect recent sales data, and the project development milestones and delivery schedule have been updated for the No.2 Mine.
Paringa CEO David Gay said: “We are extremely pleased to formalize the transition of our coal sales contract from the No.1 Mine over to the No.2 Mine.
“The fact that LG&E and KU are prepared to sign this major amendment to our sales contract confirms their belief that we will become a significant new source of production in the Illinois Basin and confirms the quality of the No.2 Mine.
“We are progressing rapidly with our Bankable Feasibility Study on the No.2 Mine and have already identified significant reductions in our operating and capital costs which have the potential to increase the value of the project considerably.”