Excel buys into coking coal project

EXCEL Coal has finalised its purchase of 51% of Millennium Coal which is developing an open cut coking coal project in Queensland’s Bowen Basin. The deal nicely complements Excel’s growing portfolio of coal assets.
Excel buys into coking coal project Excel buys into coking coal project Excel buys into coking coal project Excel buys into coking coal project Excel buys into coking coal project

Excel managing director Tony Haggarty

Staff Reporter

Millennium, which is developing the coal project near the town of Moranbah, also has PCI coal resources at Foxleigh North (EPC 855), a coking coal exploration tenement near Middlemount (EPC 726) and thermal coal exploration areas in the Surat Basin (EPC 673 and application for EPC 872).

The proposed mining area at Moranbah adjoins the western boundary of the Poitrel project, owned by BHP Mitsui Coal, and contains 46Mt of measured and indicated opencast resources.

Production is expected to kick off in late 2005 with ultimate production levels of up to 2.5 million tones of saleable coal are envisaged, although the current mining licence applications only cater for a maximum annual production of 1.9Mtp ROM, according to Clyde Henderson of Energy Economics.

“The stripping ratio will vary between 6:1 and 8:1 bcm per tonne of ROM coal over the early years of mining, then progressively increase, with the life of mine stripping ratio being around 11:1,” Henderson said.

The raw coal will be processed in a conventional dense medium cyclone washery with washery yield expected to be around 75%. The product breakdown will average 80% hard coking coal and 20% PCI coal.

Henderson added Millennium’s plans to develop an underground bord and pillar mine to operate concurrently with the Moranbah opencast operations were now on the back burner.

Excel will pay existing Millennium shareholders A$4.6 million to acquire 21% of the company and also issue 2.5 million new Excel shares, resulting in a 1.3% dilution of Excel's total equity. The new shares will be escrowed for one year. Excel will also subscribe for $34 million in new shares in Millennium, taking its ownership of Millennium to 51% on a fully diluted basis.