TIDMPDZ
RNS Number : 0429O
Prairie Mining Limited
02 November 2016
PRAIRIE MINING LIMITED
NEWS RELEASE | 2 NOVEMBER 2016
PRAIRIE AND CHINA COAL ENTER INTO A FINANCING AND CONSTRUCTION
CO-OPERATION AGREEMENT FOR THE JAN KARSKI MINE
Prairie Mining and China Coal, the second largest coal mining
company in China and one of the world's most advanced and prolific
shaft sinking and total underground coal mine construction
companies, have signed a landmark Strategic Co-operation Agreement
to advance the financing and construction of Prairie's Jan Karski
Mine in Poland.
Under the terms of the agreement, China Coal and Prairie intend
to complete a Bankable Feasibility Study by mid-2017, which will
provide the basis for an EPC contract and a construction-funding
package for the Jan Karski Mine.
HIGHLIGHTS:
-- China Coal No.5 Construction Company Ltd. ("CC5C") and
Prairie intend to enter into a full "wrap-around" Engineering,
Procurement, Construction ("EPC") contract which will see CC5C
construct the Jan Karski Mine ("JKM" or "Project") and procure a
debt financing package to fund the development of the JKM
-- CC5C and Prairie, together with the Chinese Government's
authorised mine design institute, intend to complete a Bankable
Feasibility Study by mid-2017 which will form the basis for Chinese
bank credit approval
-- A senior delegation from CC5C recently conducted a site visit
to the JKM that included meetings with regional officials and
potential Polish sub-contractors and suppliers
-- Prairie will work with a range of Polish mining and
engineering specialists, alongside CC5C, to ensure all design and
construction conforms to Polish regulations and safety
standards
-- Prairie's and CC5C's Strategic Co-operation Agreement
demonstrates the increasing economic collaboration between Poland
and China following China's proposed "One Belt, One Road"
development strategy and highlights Poland's importance as a "One
Belt Economy" for accessing key European markets
-- CC5C has been serving the mining industry for 40 years and
accounts for 40% of the Chinese market share for coal mine
construction, having completed 340 projects in China and overseas
including sinking more than 300 major shafts. This agreement fits
with CC5C's strategy of increasing its international presence as a
major project contractor
-- As the leading underground mining contractor in China, CC5C
holds unparalleled expertise in disciplines central to development
of the JKM including, shaft sinking, drilling, freezing and overall
mine development and installation
-- CC5C's parent company China Coal, is the second largest coal
producer in China with total assets of US$50bn and 110,000
employees across 53 subsidiaries. In 2015, China Coal produced
166Mt of coal across 46 open pit and underground coal mines
"Following six months of intensive review of the PFS by China
Coal, including comprehensive meetings with management, this
agreement successfully ties Prairie to one of the world's largest
and most successful coal mine construction firms and is testament
to the quality and low-operating cost nature of the Jan Karski
Mine," commented Prairie Mining's CEO Ben Stoikovich. "Prairie's
team has visited many of China Coal's mine construction projects
and operating coal mines, and it is clear that China Coal are world
leaders in mining technology and mine construction. They have
extremely high engineering, productivity and safety standards that
rival the very best Australian and US longwall coal mines. CC5C's
expertise, particularly in shaft sinking, has the potential to
significantly accelerate the construction schedule of the Jan
Karski Mine. Of equal importance is the potential for this
transaction to unlock significant financing for the Project from
Chinese banks who have a track record of supporting major EPC-led
international contracts."
Prairie Mining Group Executive and former Head of the
Secretariat of the Polish Prime Minister's Office, Mr. Artur
Kluczny said "The Government's economic policy for Poland
recognises coal as a pillar of energy security, and calls for the
re-industrialisation of the domestic economy. New investment in
state of the art and highly efficient new coal mines will boost the
mining sector and see Poland's renaissance as a significant coal
exporter. By co-operating with China Coal we contribute to
establishing new trade and investment links with China which is
also seen as a strategic option for the country. Prairie Mining
will be integrating Polish experts with the CC5C team to ensure
that all local regulatory requirements are met. We are looking
forward to seeing CC5C establish their European operating base in
Poland."
Deputy General Manager of China Coal No.5 Construction Company,
Mr. Sang Hua said, "The Jan Karski Mine is managed by a highly
experienced team in Prairie Mining and, with CC5C's shaft sinking
and coal mine construction expertise, will no doubt be developed
into a world class coal mine. We are excited to have entered into
this co-operation agreement with Prairie Mining and see the Jan
Karski Mine as a flagship overseas development project for China
Coal as part of our strategy to increase China Coal's international
presence as a major mine development contractor."
For further information, contact:
Ben Stoikovich
Chief Executive
Officer
+44 207 478 3900
Artur Kluczny
Group Executive
- Poland
+48 22 351 73 80
Sapan Ghai
Communications
+44 207 478 3900
info@pdz.com.au
China Coal Co-operation Agreement
Prairie Mining Limited ("Prairie") and China Coal No.5
Construction Company Ltd ("CC5C") have been in discussions since
2014 regarding the potential for collaboration in designing and
constructing the Jan Karski Mine ("JKM" or "Project").
During this period, Prairie's senior management and technical
team have met with CC5C numerous times in China and inspected
CC5C's various shaft sinking projects, mine construction sites and
state of the art longwall coal mines operated by China Coal.
In October 2016, Prairie hosted a senior CC5C delegation to
Poland where they conducted a site visit to the JKM. The delegation
was officially welcomed by Lublin regional government officials,
and met with various Polish service providers and sub-contractors
who could potentially participate in the Project.
The Strategic Co-operation Agreement was signed confirming the
intention of the parties to, on a best efforts basis:
(i) complete a Bankable Feasibility Study by mid-2017, which
will form the basis of Chinese bank credit approval for project
finance;
(ii) based on the results of the Bankable Feasibility Study,
enter into a complete Engineering, Procurement, Construction
("EPC") contract under which CC5C will construct the Jan Karski
Mine; and
(iii) incorporate relevant Polish content into the design and
construction phases, which will include working with a range of
Polish specialists, sub-contractors and business partners.
It is the intention of the parties to enter into future binding
agreements for CC5C to construct the Jan Karski Mine once the
Bankable Feasibility Study is completed successfully and indicative
financing terms are given by financing institutions.
China Coal International Strategy and "One Belt, One Road"
Initiative
CC5C has been internationally active since 1988. Through CC5C,
China Coal expedited the implementation of its strategy to become
an internationally competitive project contractor. Globally, China
Coal has undertaken and continues to develop several projects
across Morocco, Bangladesh, Turkey, Vietnam, India, and Ecuador for
clients and partners including:
-- Vedanta Resources plc - a London-listed, global diversified natural resources group; and
-- JSW Group - a leading Indian conglomerate part of the O.P. Jindal Group.
In 2013, Chinese President Xi Jinping proposed the "One Belt,
One Road" development strategy and framework which calls for
greater economic cohesion between China and 60 countries throughout
Europe, Asia and Africa through building infrastructure, increasing
cultural exchanges, and broadening trade.
Poland is considered a key "One Belt Economy" important to
Chinese economic access to Europe, most recently demonstrated by
meetings between the Chinese and Polish Leaders in June 2016
including signing of cooperative treaties, the opening of a
China-Poland trade forum and welcoming of freight trains linking
Chengdu and ód , carrying goods between the capital of Sichuan
Province and Poland's third-largest city.
Prairie's and CC5C's Strategic Co-operation Agreement
demonstrates the increasing economic collaboration between Poland
and China.
Table 1: Select International Projects undertaken by
CC5C
----------------------------------------------------------------------
Morocco
----------------------------------------------------------------------
1991 Jeredah Coal Mine -- 785 m shaft sinking and
equipping
-- Underground development
------- ------------------------ -----------------------------------
Bangladesh
----------------------------------------------------------------------
2005 Barapukuria Coal -- 326 m main shaft sinking
Mine -- 320 m auxiliary shaft sinking
-- Underground development
-- Infrastructure and installation
------- ------------------------ -----------------------------------
2005 Barapukuria Coal-fired -- Civil work and equipment
Power Plant installation for 1,200 m long
trestle from coal mine to power
plant
------- ------------------------ -----------------------------------
Turkey
----------------------------------------------------------------------
Ongoing Kinik-Elmadere Coal -- 790 m shaft sinking (2 shafts,
Mine 790 m each)
------- ------------------------ -----------------------------------
2011 Karadon Kilimli -- 716 m shaft sinking
-- Underground development
------- ------------------------ -----------------------------------
2011 Kozlu Incirharmani -- 478 m shaft sinking
Coal Mine -- 238 m shaft repair
------- ------------------------ -----------------------------------
2003 Kozlu Coal Mine -- 580 m shaft repair
-- 263 m shaft sinking
------- ------------------------ -----------------------------------
Vietnam
----------------------------------------------------------------------
2013 Ha Lam Coal Mine -- Supply and installation
of headgear, shaft equipment
and winding system
------- ------------------------ -----------------------------------
2010 Ha Lam Coal Mine -- Sinking of three shafts
between 339 m and 420 m
------- ------------------------ -----------------------------------
India
----------------------------------------------------------------------
Ongoing Sindesar Khurd Lead-Zinc -- 1,051 m shaft sinking and
Mine shaft equipping
-- Underground development
-- Surface and underground
installations
-- Ramp development
------- ------------------------ -----------------------------------
2013 Parbatpur Coal Mine -- Construction of 4 inclines
totalling 3,780 m
------- ------------------------ -----------------------------------
2012 Icchapur Coal Mine -- Feasibility Study Report
for a mine with capacity of
2-5 Mtpa
------- ------------------------ -----------------------------------
2011 Ichhapur plus two -- 3D high resolution seismic
coal blocks survey over 20.77 km(2)
------- ------------------------ -----------------------------------
Ecuador
----------------------------------------------------------------------
2016 Coca Codo-Sinclair -- Procurement and operation
Hydropower Project of winding systems for 2 shafts
(538 m and 535 m)
------- ------------------------ -----------------------------------
Overview of CC5C
With total assets of US$1.3bn and annual revenues in excess of
US$1bn, CC5C is the leading underground mining contractor in China.
CC5C currently has over 11,000 employees with expertise in shaft
sinking, drilling, freezing, incline construction, mine
development, and shaft repair work.
CC5C's parent company China National Coal Group Corporation
("China Coal") is a wholly state-owned coal producer with 110,000
employees across 53 subsidiaries. As at end of 2014, China Coal had
total assets of RMB312.2Bn (US$50bn) and operating revenues of
RMB96.5Bn (US$16bn) following production of 183Mt raw coal across
46 open pit and underground mines.
China Coal has committed to building an integrated value chain
across coal mining, power generation and coal-based chemicals while
remaining committed to technological advancement and structural
upgrading of the coal industry. China Coal operates across a number
of disciplines including:
-- Coal mine construction - through Prairie's new strategic partner, CC5C
-- Coal production and trade - as 2(nd) largest coal producer in China
-- Coal mine equipment manufacturing - currently ranked No.1 in China
-- Coal mine designing and engineering services - through two leading mine design institutes
-- Pit-mouth power generation - 6,740 MW in operation and under construction
CC5C was locally established in 1970 and currently accounts for
40% of the Chinese mining contractor market with 340 completed
projects worldwide. CC5C has designed and constructed the majority
of China's key coal projects and made a significant contribution to
the country's coal construction industry including:
-- deepest ever vertical shaft sunk - 1,341m depth;
-- largest ever vertical shaft sunk - 10.5m diameter; and
-- largest incline driven - 45.51m(2) cross section.
CC5C owns a vast array of construction equipment capable of
simultaneously sinking 30 shafts and developing 20 underground
projects. CC5C's current work program includes:
-- mine development works at 32 mines;
-- 13 shaft sinking projects with depths up to 1,222m and diameters up to 10.5m;
-- 5 inclines of up to 20deg inclination and over 2km in length; and
-- 11 ground freezing projects for shaft / incline up to depths of 860m.
Featured CC5C Mine Construction Projects
CC5C's technological expertise and ownership of over 100
industry patents in mine construction provides unparalleled ability
to undertake projects of significant scale within given
timeframes.
CC5C leads the field in shaft sinking through all forms of
strata in a timely and efficient manner. Since 2005 alone, CC5C has
sunk 38 shafts using ground freezing methods.
Table 2: CC5C Shafts by Freezing since 2005 (metres)
No. Name of Shaft Depth Diameter Freezing Max Lining
Depth Thickness
Dingji Coal Mine
1 - Ventilation Shaft 833 7.5 558 2.10
==== ===================== ====== ========= ========= ===========
Gubei Coal Mine -
2 Ventilation Shaft 681 7.0 502 2.00
==== ===================== ====== ========= ========= ===========
Xuehu Coal Mine -
3 Main Shaft 830 5.0 460 1.70
==== ===================== ====== ========= ========= ===========
Xuehu Coal Mine -
4 Auxiliary Shaft 850 6.5 460 1.90
==== ===================== ====== ========= ========= ===========
Xuehu Coal Mine -
5 Ventilation Shaft 659 5.5 430 1.70
==== ===================== ====== ========= ========= ===========
Quandin Coal Mine
6 - Main Shaft 623 5.0 513 1.70
==== ===================== ====== ========= ========= ===========
Quandin Coal Mine
7 - Auxiliary Shaft 651 6.5 500 2.00
==== ===================== ====== ========= ========= ===========
Quandin Coal Mine
8 - Ventilation Shaft 548 5.0 523 1.70
==== ===================== ====== ========= ========= ===========
Yuncheng Coal Mine
9 - Main Shaft 917 7.0 590 2.15
==== ===================== ====== ========= ========= ===========
Zhaogu No. 2 Coal
10 Mine - Main Shaft 712 5.0 615 1.50
==== ===================== ====== ========= ========= ===========
Zhaogu No. 3 Coal
Mine - Auxiliary
11 Shaft 740 6.9 628 2.00
==== ===================== ====== ========= ========= ===========
Zhaogu No. 4 Coal
Mine - Ventilation
12 Shaft 712 5.2 628 1.60
==== ===================== ====== ========= ========= ===========
Xuehu Coal Mine -
13 Ventilation Shaft 739 5.5 450 1.70
==== ===================== ====== ========= ========= ===========
Chensilou Coal Mine
14 - Ventilation Shaft 462 5.0 410 1.60
==== ===================== ====== ========= ========= ===========
Zhujixi Coal Mine
15 - Main Shaft 993 6.0 529 1.90
==== ===================== ====== ========= ========= ===========
Chenmanzhuang Coal
Mine - Auxiliary
16 Shaft 993 6.5 640 2.45
==== ===================== ====== ========= ========= ===========
Shunhe Coal Mine
17 - Auxiliary Shaft 777 6.0 500 1.75
==== ===================== ====== ========= ========= ===========
Hubaowan Coal Mine
18 - Auxiliary Shaft 582 7.0 600 1.80
==== ===================== ====== ========= ========= ===========
Liliangdian Coal
19 Mine - Main Shaft 756 5.0 772 1.50
==== ===================== ====== ========= ========= ===========
Liliangdian Coal
Mine - Auxiliary
20 Shaft 781 6.5 800 1.85
==== ===================== ====== ========= ========= ===========
Hulusu Coal Mine
21 - Main Shaft 670 9.6 525 1.40
==== ===================== ====== ========= ========= ===========
Hulusu Coal Mine
22 - Return Air Shaft 681 8.0 672 1.30
==== ===================== ====== ========= ========= ===========
Menkeqing Coal Mine
23 - Auxiliary Shaft 756 10.0 772 1.50
==== ===================== ====== ========= ========= ===========
Bayangaole Coal Mine
24 - Auxiliary Shaft 645 9.0 655 2.05
==== ===================== ====== ========= ========= ===========
Hongsi Coal Mine
25 - Ventilation Shaft 963 6.0 630 1.80
==== ===================== ====== ========= ========= ===========
Nalinhe Coal Mine
26 - Auxiliary Shaft 588 10.5 521 2.50
==== ===================== ====== ========= ========= ===========
Honger Coal Mine
27 - Main Shaft 525 5.5 409 1.45
==== ===================== ====== ========= ========= ===========
Dingjialian Coal
Mine - Auxiliary
28 Shaft 920 6.8 651 1.35
==== ===================== ====== ========= ========= ===========
Xinzhuang Coal Mine
29 - Auxiliary Shaft 990 9.0 910 2.20
==== ===================== ====== ========= ========= ===========
Shaozhai Coal Mine
30 - Main Shaft 866 5.5 744 1.55
==== ===================== ====== ========= ========= ===========
Hongqingliang Coal
Mine - Auxiliary
31 Shaft 465 9.5 404 1.40
==== ===================== ====== ========= ========= ===========
Baijiahaizi Coal
Mine - Intake Air
32 Shaft 679 6.8 715 1.50
==== ===================== ====== ========= ========= ===========
Dahaize Coal Mine
33 - Auxiliary Shaft 661 10.0 678 2.35
==== ===================== ====== ========= ========= ===========
Dahaize Coal Mine
34 - Return Air Shaft 669 8.0 686 1.90
==== ===================== ====== ========= ========= ===========
Zhaoxian Coal Mine
35 - Return Air Shaft 564 6.0 514 1.10
==== ===================== ====== ========= ========= ===========
Hongqinghe Coal Mine
36 - Auxiliary Shaft 730 8.0 694 2.20
==== ===================== ====== ========= ========= ===========
Tangkou Coal Mine
37 - Intake Air Shaft 1,033 7.0 470 1.40
==== ===================== ====== ========= ========= ===========
Tangkou Coal Mine
38 - Return Air Shaft 1,033 6.0 460 1.30
==== ===================== ====== ========= ========= ===========
To view a full copy of this announcement including all figures
and illustrations, please see refer to the Company's website at
www.pdz.com.au
This information is provided by RNS
The company news service from the London Stock Exchange
END
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