The study concludes the project has “attractive development potential with robust project economics as either an open cut or an underground operation”

“Either option allows the development of a significant mining operation producing approximately 5Mtpa [run of mine] coal (3.5Mtpa product coal),” the company said in its announcement.

“Total mine life is expected to be between 14 [and 20-plus] years with first coal targeted from late 2015.”

While the main product would be premium hard coking coal, a thermal coal co-product is expected to be saleable as a stand-alone product or as a blend component.

The study found the underground option would achieve full production sooner and allow a more consistent production rate; be less exposed to wet weather-related production losses; have lower capital and operating costs and reduced labour requirements; and a smaller environmental footprint and potentially lower approvals hurdles.

The capital costs equate to $166 per annual ROM tonne and $206 per annual ROM tonne for the underground and open cut respectively.

Its underground option would entail a single longwall operating in a height range of 3-4m, with up to three development units to support the longwall operation and four longwall panels in the GL seam and five in the GLB seam.

The $830 million capital cost would be made up of $359 million for plant and equipment, $284 million for surface infrastructure and related costs and $187 million for coal handling and preparation equipment.

Free-on-board costs of $88 per production tonne include rail, port and marketing costs.

The estimates have been determined on an owner-operator basis and are based on assessed industry operating costs in Queensland.

“Completion of this concept study is a significant milestone for Carabella,” managing director Anthony Quin said.

“It confirms the attractive development potential of the Grosvenor West project.

“Our coal quality evaluation indicates that this is world-class coking coal with excellent metallurgical properties.

“Our two-product strategy maximises the overall value proposition for Grosvenor West.”

Grosvenor West is located 10km northwest of Moranbah in the northern Bowen Basin.

It is situated on the eastern border of EPC 1069, with rail options to ports positioned adjacent to the Goonyella rail system.

Detailed coal quality analysis indicates Grosvenor West can produce a world-class hard coking coal comparable to neighbouring producing mines including Goonyella Riverside, North Goonyella and Moranbah North.

“The quality attributes of the 10% ash product coal, especially strong caking properties, low phosphorous and benign ash chemistry are expected to be highly regarded by customers,” the company said.

Carabella will continue with detailed studies to finalise the preferred mining option for the feasibility study by June 2012.