Paringa Intercepts the Kentucky Number 9 Coal Seam With the Poplar Grove Slope
20 December 2018 - 11:10AM
Paringa Resources Limited (“Paringa” or “the Company”)
(ASX: PNL, NASDAQ: PNRL) is pleased to advise that the
Company has intercepted the Western Kentucky Number 9 coal seam
with the Poplar Grove primary transportation slope in Western
Kentucky. The intersection of the coal seam by the Poplar Grove
slope is a material milestone towards the production of coal.
Intercepting the coal seam enables the Company
to progress to the next phase of mining activities, including
bottom development. Bottom development involves the linking
of the slope with both the intake and exhaust air shafts to
establish the mine’s permanent ventilation system, as well as the
construction of critical underground infrastructure such as the
bottom sump, slope belt tailpiece and tramp iron magnet. Production
of coal from bottom development will be utilised to commission the
coal handling and preparation plant (“CHPP”) and to produce clean
coal for sales to customers.
The CHPP is ready to receive first coal, with
final exterior cladding and roofing to be completed shortly. All
other materials handling infrastructure at the mine site is
operational, enabling the transfer of run of mine material from the
mine site to the CHPP. The Ainsworth dock on the Green River is
also structurally complete and will be ready to receive the first
coal processed by the CHPP.
Paringa has recently completed the last of seven
job fairs (interview and hiring events) interviewing over 400
qualified applicants. Additionally, mining equipment is currently
being received in anticipation for the transition from contract
mining to owner-operated production in January.
Market update
Several factors are creating significant upward
pressure on Illinois Coal Basin (“ILB”) coal prices, with evidence
that local utilities are rapidly moving to secure 2019 and 2020
coal supply, and incentivising higher pricing and longer-term
contracts than have been seen in the region for some time.
Strong market fundaments continue to prevail in
the ILB, particularly regarding the price of natural gas, the main
competing fuel source for power generation.
Working gas stocks in underground storage are
currently significantly below the minimum 5-year range. In
November, natural gas prices surged as much as 50% as cold weather
in the U.S. raised concerns about supply shortages given the lack
of available inventory, with Henry Hub pricing reaching a high of
$4.93/mbtu.
Figures 1 & 2 are available at
http://www.globenewswire.com/NewsRoom/AttachmentNg/cd25c708-7785-42ac-a9d4-4a361f864e4a
Additionally, high international coal pricing
has led to a shift in coal sales from domestic consumption to
export, from less than 18Mt of net exports from the U.S. in 2016 to
potentially ~55Mt in 2018.
With less coal available domestically in the
U.S., coal stockpiles have continued to fall. U.S. Energy
Information Administration data released for September 2018 saw a
draw of ~3.5 million tons in power generation coal stockpiles, the
largest draw in 28 years.
Figures 3 & 4 are available at
http://www.globenewswire.com/NewsRoom/AttachmentNg/f19423b4-fb96-42e7-880c-b944441e13ef
For further information, contact:
Egan Antill
CEO & Managing
Director
eantill@paringaresources.com
Dominic AllenVice President,
Financedallen@paringaresources.com
Forward Looking Statements
This report may include forward-looking
statements. These forward-looking statements are based on Paringa’s
expectations and beliefs concerning future events. Forward looking
statements are necessarily subject to risks, uncertainties and
other factors, many of which are outside the control of Paringa,
which could cause actual results to differ materially from such
statements. Paringa makes no undertaking to subsequently update or
revise the forward-looking statements made in this announcement, to
reflect the circumstances or events after the date of that
announcement.
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