xio
17 years ago
Billions Of Dollars Of Revenue
June 20, 2008
At Today’s Oil Price, Altona Has Billions Of Dollars Of Revenue To Look Forward To From Its Ackaringa Coal-To-Liquids Project
By Our Man in the City
The stock market may be being put off by the US$3.2 billion development bill hanging over Altona Resources’ coal-to-liquids Arckaringa project in Australia, but a crude calculation based on today’s oil price of US$140 per barrel suggests it will take less than two years’ worth of production to get a return on its investment, according to chairman Chris Lambert. “Diesel commands a US$15 premium to today’s oil price. Add an extra US$20 on top again for jet fuel and you’re talking about the quality of product we will produce.” By his estimates, Altona will make US$1.7 billion from oil sales and an extra US$150 million from providing power each year. Of course, that is dependent on oil prices staying where they are today. When Royal Bank of Scotland spent four months putting its financial model together in early 2007, it worked off a forward oil price of US$40 per barrel. No-one really knows what the oil price will be when Altona starts production, potentially in 2013. Yet if oil did maintain its price strength, then the company will be laughing all the way to the bank.
To give a headline summary of Altona’s situation, it has 7.8 billion tonnes of coal underneath 150 metres of overburden. This equates to around 7.5 billion barrels of clean liquid fuel which will be converted at the rate of 10 million barrels a year. Around 700 million tonnes of coal should be upgraded to Jorc level soon, the company having drilled up historical workings. “The numbers shouldn’t change. Our drilling confirms the original estimates,” says Mr Lambert. With the technical part of the pre-feasibility study done, Altona will soon begin the bankable feasibility study (BFS). However, for a couple of good reasons, the company is keeping the full details to itself: “We won’t publish the full pre-feasibility information as it spans nine different reports and contains a lot of sensitive information that our competitors could use to their advantage,” says Mr Lambert.
An “Owners Team” has been assembled to oversee the BFS including engineering consultant Jacobs Australia and project management group Enthalpy. An overall project manager will soon be announced in the form of a reputable mining engineer, says Mr Lambert. A key aim of the team will be to bring down the capital expenditure requirements. This is where Chinese energy group Tongjiang should be able to help. Having paid the first two components of a three-part £11.6 million investment in Altona, Tongjiang currently owns 20.9 per cent of the business. “We’re hoping they will introduce us to Chinese manufacturing companies who can provide reliable equipment for the project,” says Mr Lambert. He also expects to see an offtake agreement into China, potentially alongside opportunities to supply fuel and power domestically in Southern Australia and to BHP Billiton, which needs water and power for its Olympic Dam project 300 kilometres from Altona’s base. These conversations are considerations for the future but are already on the company’s agenda. “We’ve not even talked to BHP yet, but it’s an obvious customer on our doorstep,” adds Mr Lambert.
The BFS should be completed by the middle of 2010. Altona raised enough money through the Tongjiang investment to pay for around 60 to 70 per cent of the study. “They offered to put up all the money, but we wanted the ability to raise more at a higher level later on,” explains Mr Lambert. “It will be at least another year before we will need to come back to the market for this extra money.”
The company is certainly at a turning point in its career. The recruitment of mining experts and the securing of most of the BFS funding means Altona can now focus on refining the design of the project and working out with whom it should sign sales contracts. There are still a few areas that require clarity, however. The appearance in February of coal group Homeland Energy on the shareholder register with a 15.6 per cent stake, shouldn’t be ignored. Homeland caused a fuss before the recent EGM convened to approve Tongjiang’s involvement, but eventually declared its support. If it’s trying to muscle in on Altona, it may want to consider that Tongjiang will soon own 45.9 per cent of the business, once the third tranche of its investment is made, and will be a dominant force. A memorandum of understanding with BP has seen Altona swap information on potential development opportunities at Arckaringa. Mr Lambert says he is none the wiser as to whether BP will take a stake in Altona. The agreement expires at the end of this month.
Shareholders may be disappointed with the lacklustre share price performance of late, but those familiar with the story know that this is a slow but steady development that could eventually yield significant returns. “We haven’t hyped the project. The information we’ve supplied has been conservative and we’ve stuck to the timetable,” comments Mr Lambert. “Yet in three years, having turned around a large coal deposit in the desert into possibly one of the largest energy banks in the world, is pretty impressive
xio
17 years ago
Completion of Field Technical Programme
And Progressing Coal-to-Liquids Feasibility Study
Altona Resources Plc, the Australian based energy company, is pleased to
announce the completion of the key technical field components of the
pre-feasibility study for the development of an integrated Coal-To-Liquids
("CTL") plant and Co-generation power facility, at its Arckaringa Project
("Arckaringa") in South Australia.
The drilling campaign focused on the Wintinna Coal Deposit and was completed on
schedule on 11th February, 2008. Sufficient total drilling meterage and sampling
was achieved from 20 boreholes to meet the programme's key objectives, including
the definition of approximately 700 million tonnes of coal that can be
classified as Measured or Indicated according to the current JORC Code for
reporting resources.
The Company anticipates that it will take two months to evaluate and report on
the results of the field programme and bring the pre feasibility stage to a
close. A positive outcome will enable Altona to proceed confidently to the final
feasibility stage of its Bankable Feasibility Study ("BFS").
The following core strengths have been confirmed during pre-feasibility at
Arckaringa:
* Proven coal resources
* Conventional open cut coal mining possible for the Wintinna deposit
* Coal resources of a quality suitable for CTL technology
* Expandable plant design
* Excellent infrastructure with immediate access to existing railway and
ports
* Strong demand for electricity in South Australia due to State deficit
* Existing export and domestic markets for diesel and jet fuels
* Strong Government support in a politically stable country
* Environmental issues identified
* Competitive project economics
A decision to move to final feasibility is likely to elevate Arckaringa to
"Major Project" status in South Australia, under which the State Government
would establish a process to streamline evaluation and approvals. Based on
advice from key advisers, including Jacobs Consultancy and Hatch Engineering,
the Company anticipates that the final feasibility and Government approvals
stage will take approximately 24 months. The construction of two modules
comprising the "base case" 10 million barrel per year CTL Plant and associated
power facility could come on stream over a period of between 36 and 54 months.
Presenting at the AJM 3rd Annual Coal-To-Liquids/Gas-To-Liquids Conference in
Brisbane on 27 February, Altona's Managing Director Chris Schrape highlighted
the steady progress demonstrated over the past 12 months, and set out the
proposed schedule for the final feasibility stage, including Government
approvals, and for the construction of Arckaringa. The Minister for Resources
and Energy, Hon. Martin Ferguson stated at the conference, "Energy security is
absolutely critical to Australia's economic prosperity and I believe
coal-to-liquids and gas-to-liquids will play a major role in Australia's energy
future."
As part of Altona's continued drive in targeting Australasian markets, Mr
Schrape will also be presenting at the 5th Annual CTLtec Conference in Beijing
on 4 March.
Chris Schrape said, "Following an intense and productive period for Altona I am
pleased to wrap up the drilling campaign at Arckaringa, and with the completion
of the pre feasibility study in sight, look forward to progressing to the final
stage of the BFS. All the positive factors favouring development at Arckaringa
continue to be confirmed by our studies and it is shaping up as a highly
exciting project. The Arckaringa coal basin contains an estimated 7.8 billion
tonnes of coal. The CTL process is ideal for the resource, and the demand
economics from local and international markets will underpin the potential of
the project.
"The next period of activity for the Company will be even busier, as we focus on
planning and managing the final feasibility work and targeting both the
Australian and Asian markets for the project's future production of high value
liquid fuels. We believe that the Asian market in particular could be vital for
Altona and we are keen to cement relationships, such as our recently announced
deal with Hong Kong investment house Tongjiang International Energy, to build
strategic business opportunities moving forward. In that regard, I look forward
to presenting in Beijing and telling the Chinese market more about the full
potential of the Arckaringa Project.
Technical Information
A bulk sample of approximately five tonnes of coal has been sampled from five
large diameter (200mm) partially cored boreholes since drilling operations
commenced on 5th May, 2007. Groundwater production wells and monitoring
piezometers were constructed for a comprehensive assessment of the
hydrogeological characteristics of the deposit and four cored geotechnical
boreholes were completed to better define the geotechnical parameters of the
different lithological units proposed to be mined at the deposit. Ten
geophysically logged slim diameter (HQ-61mm) partially cored boreholes and two
geophysically logged open holes were drilled to reduce the borehole spacing
within the area of interest to between 500 metres and 1 kilometre for resource
definition purposes.
Each of the completed boreholes was successfully geophysically logged. All coal
seams have been sampled and dispatched to the ACIRL laboratories for testing and
analysis. The programme focused on the optimum area within the Wintinna deposit
for extraction by open-cut mining methods.
A copy of the Mr. Schrape's presentation to the Brisbane Conference is available
on the Company's website www.altonaresources.com
The information contained in this announcement has been reviewed by Norman
Kennedy, the Technical Director of the Company. Mr Kennedy holds a Bachelor of
Science from the University of NSW, and is a Member of the Australian Institute
of Mining and Metallurgy
***ENDS***
xio
17 years ago
Australia regulator approves extension of coal quotas
http://www.mining-journal.com/Breaking_News.aspx?breaking_news_article_id=4307
Australia`s competition regulator gave interim approval to extend the use of a coal-export quota system at Newcastle, the world`s biggest export harbor for the
fuel, to help prevent an increase in shipping delays.
The Australian Competition and Consumer Commission separately said it plans to approve a similar system at Dalrymple Bay port in Queensland for 12 months "only," to provide industry with time to develop a solution to tackle the issue of ships waiting outside the port.
Bottlenecks at Australian ports have helped constrain the supply of the fuel to Asian customers, boosting spot prices to a record and increasing costs for mining companies. The two ports both have quota systems to try to better match port and rail capacity with demand. Newcastle`s quota system, known as the
capacity balancing system, or CBS, was due to end on December 31.
Interim authorisation to continue the Newcastle quotas "simply facilitates the continuation of the existing CBS as a means of limiting the queue of ships and consequential costs" as the regulator considers other proposals to manage coal exports at the port, Graeme Samuel, chairman of the Canberra-based
commission, said in the statement.
The regulator last week rejected an alternative plan by the operator of the two coal terminals at Newcastle to change the way export capacity is allocated by basing quotas on rail transportation contracts. The modified plan was backed by Xstrata plc, the world`s biggest power-station coal exporter, and Rio
Tinto.
Port Waratah Coal Services Ltd, the terminal operator, agreed to the interim plan to continue the existing system through to 2008, the group said in a separate e-mailed statement. Under the system, coal producers have export allocations rationed on a pro-rata basis when demand for exports exceeds the capacity
of the coal transportation system from the Hunter Valley mines through to Newcastle port.
"It is hoped that a medium-term solution, if one can be agreed upon mid-next year, will serve the coal chain up until mid-2010," Port Waratah said in the statement. Proposals to extend an existing system to share capacity at the New South Wales port were made by Newcastle Port Corp and Donaldson Coal Pty, the regulator said.
Rio Tinto Group`s Coal & Allied Industries Ltd last month said that without quotas, the line of ships waiting outside Newcastle to load coal could exceed 70-80 by the end of the first quarter, incurring "substantial" costs.
Separately the competition regulator said it isn`t satisfied that the companies involved in coal transportation to and through Dalrymple Bay port are working to tackle the ship queue. The port`s quota system, known as the vessel queue management system or QMS, has been operating for two years so far.
"The ACCC is concerned that the operation of the QMS for an extended period may hinder the development of a long-term solution to address" the bottlenecks, the regulator said, explaining its decision to limit approval for the system to another year.
(Bloomberg, December 20)
xio
17 years ago
Aim miners power ahead like the big boys
By Ben Bland
Last Updated: 12:06am GMT 17/12/2007
.............."The mining sector is structured for acquisitions from top to bottom level," he said. "The plan for many Aim companies is to develop a project up to a size or scale where they have to get taken over - that is what they view as success." Many of the large-cap miners cut back on their exploration programmes in the 1990s as they tried to reduce their costs because metal prices were weaker. Now, the small independent miners - of which there are more than 200 listed on Aim - take on much of the exploration risk, hoping that they will be snapped up if they strike gold, so to speak.
"The big problem in the mining industry is the time it takes to develop a large mineral deposit into the production phase - about 10 years," Mr Williams said. "Life is too short and Chinese growth is not going to stand around and wait for you. So the big boys wait until someone else has developed the project and there's little risk and then go for it...............
http://www.telegraph.co.uk/money/main.jhtml?xml=/money/2007/12/17/ccaimmkt117.xml
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