In an investor presentation yesterday, Bathurst outlined the development plan for the project which is close to Solid Energy’s 2 million tonnes per annum coking coal mine.
The Buller project is targeting the same Brunner coal measures as Stockton with Bathurst noting the primary Mangatini seam was up to 15m thick with an average overburden of 40m.
Bathurst plans to start mining the Escarpment deposit in the project in the December quarter of 2011 to produce about 650,000 tonnes of hard coking coal in an area containing old workings.
A ramp-up to 1Mtpa is expected in 2012 when mining starts moving into an area of virgin coal.
In the 2012-13 financial year, Bathurst expects the Deep Creek prospect of the project to start up.
This will double total production to 2Mtpa.
Two years later, the explorer hopes to kick off another open cut operation at the North Buller prospect to ramp up to 4Mtpa of product coal.
This expansion will require another wash plant and additional infrastructure.
While construction for the initial Escarpment operation of the project is expected to start up in the next three months, Bathurst is yet to finalise its options for exporting the coal.
One option is to rail the stockpiled coal 10 kilometres to Westport and then ship it to New Plymouth for export, while there is an alternative option to rail the coal 380km directly to Lyttelton Port for export.
Total resources of the Buller project are 47.1Mt while the company established initial reserves of 12.6Mt this week.
Capital expenditure costs to get to 2Mpta are estimated to be $US57 million.
Under 1Mtpa of production, Bathurst expects operating costs of $103 per tonne and at 2Mtpa they are estimated to fall to $83-88/t.
While hard coking coal prices are around $209/t at the moment, Bathurst is confident of getting a premium of 5-15% to the going price for the commodity because of the quality of its coal.
Analysis of the coal so far has confirmed that the Buller project will produce an excellent high volatile bituminous coking coal.
The total ash content is estimated to be 3-5% on an air-dried basis while total sulfur is expected to be 0.7% adb.
The estimated moisture content is 8% (as received), while the calorific value is in the realm of 8238 kilocalories per kilogram.
Shares in the company were unchanged at 43c yesterday.