TIDMPDZ
RNS Number : 4834X
Prairie Mining Limited
22 February 2017
PRAIRIE MINING LIMITED
NEWS RELEASE | 22 February 2017
STUDY CONFIRMS SIGNIFICANT COST AND TIMING BENEFITS OF EXISTING
INFRASTRUCTURE AT DEBIENSKO
HIGHLIGHTS:
-- Infrastructure Study confirms existing high quality and site
connected rail, road, power and water infrastructure at Debiensko
is available for immediate use
-- The abundance of high quality infrastructure already in place
at Debiensko to support an accelerated development timeline with
very low capital intensity
-- Rail - existing rail siding with on-site link to national
rail network provides direct delivery route for Debiensko's hard
coking coal product to Europe's steel industry
-- Roads - public roads connecting the Debiensko mine site to
the national highway are suitable for heavy vehicles and allow
immediate access for commencement of development activity
-- Power - grid connection already at site with executed supply
agreement for 30MW to support full scale mine production with an
estimated tariff of only USc6.8/kWh (PLN270/MWh)
-- Water - mains supply already at site with the local water
utility confirming available water supply for full scale operations
at Debiensko
-- Rail, road, power and water infrastructure requires only
minor refurbishment and upgrades to support full scale mine
production at Debiensko, with a total estimated cost of only
US$10m
-- Results of the Debiensko Infrastructure Study will be
incorporated into the current Scoping Study, which is due to be
published in the coming weeks
Prairie Mining Limited ("Prairie" or "Company") continues to
progress the Scoping Study at its 100% owned Debiensko Hard Coking
Coal Project ("Debiensko" or "Project") in Poland. Work to date
confirms that project infrastructure was substantially advanced by
the previous owner, demonstrating potential for an accelerated mine
development schedule and very low capital intensity.
Based on the results of the Infrastructure Study, it is
estimated that it will cost US$10m to bring key servicing
infrastructure up to full operational capacity for the Debiensko
mine redevelopment.
Commenting on the extensive infrastructure already available at
Debiensko, Prairie's Chief Executive Officer Ben Stoikovich stated:
"Our Infrastructure Study has confirmed that Debiensko has
significant existing high quality and site connected rail, power,
road and water infrastructure which can be brought into full
operating capacity to service the mine life at minimal cost. This
existing and fully permitted critical infrastructure means that we
will have substantial savings in capital expenditure costs and
avoid lengthy permitting processes and access negotiations
typically associated with many other coal development projects.
Having only recently acquired the Project, we are rapidly advancing
its feasibility and development, with the Scoping Study due to be
published in the coming weeks. There are very few emerging premium
hard coking coal projects globally with such established
infrastructure as Debiensko and in such close proximity to Europe's
'blue chip' steelmakers."
The Scoping Study is being conducted in accordance with
international best practise in all study areas and remains on track
to be completed during in the coming weeks.
On-Site Rail Line Requires Minimal Capex for Direct Access to
Steelmakers
Prior to 2000, when the former Debiensko mine was still in
production, the mine was connected to the main Polish rail network.
The majority of the mine rail infrastructure is still in place and
based on previous specialist studies, minimal capital expenditure
would be required for refurbishment. Prairie intends to utilise the
existing rail network to transport its premium hard coking coal to
regional steel mills and coking plants.
Established Road Network Provides Immediate Access for Mine
Development
The Debiensko mine site is connected by public roads to the
major road network and importantly, directly connected to Poland's
north-south motorway, Highway A1 which runs from the port of Gdansk
on the Baltic Sea through the Upper Silesian Industry Area to the
Polish-Czech border where it is connected with the Czech motorway
D1. The road network provides immediate access for commencement of
development activity at the mine, delivery of equipment and access
for the workforce.
Life of Mine Power Supply already Available
The Debiensko mine site is serviced by an existing high voltage
power grid. There is already a 6kV line with 13MW capacity
connected to site, with two additional 110kV, 25MW incoming lines
available. There is an existing power supply and connection
agreement in place for Debiensko with Tauron Dystrybucja GZE S.A.
("Tauron"), the local power grid operator. This agreement provides
for a maximum of 30MW of power to be supplied to the mine. This
supply is sufficient for full scale mine production at Debiensko
for the life of the project and it fulfils all Polish statutory
requirements requiring both a primary and back-up power supply.
The estimated electricity cost for Debiensko is approximately
PLN270/MWh (USc6.8/kWh) based on standard tariffs.
Tauron supplies over 49 TWh of electricity to over 5.4 million
customers per year which makes it the largest distributor of
electricity in Poland. It is also the second largest electricity
generator and supplier in Poland and the largest supplier of heat
in Upper Silesia.
Water Supply Availability Confirmed
Potable water supply is available at Debiensko via an existing
500mm main water line, with available water supply of 400m(3) /day
officially confirmed by PWiK Czerwionka-Leszczyny, the local water
authority. Initial estimates are that the Debiensko mine will
require no more than 350m(3) /day at steady state production for
the life of the Project.
total Estimated cost to reinstate full operating capacity
Rail, power, water and road infrastructure requires only minor
refurbishment and upgrades to support full scale mine production at
Debiensko, with a total estimated cost of US$10m.
Table 1: Estimated Costs of Infrastructure
--------------------------------------------------------------------
Infrastructure / Utility Estimated Cost
(US$m)
--------------------------------------------------- ---------------
Rail - refurbishment and upgrading of rail siding 3.6
=================================================== ===============
Road - upgrade at site entrance 0.4
=================================================== ===============
Power - installation of substation and switchgear 5.3
=================================================== ===============
Water - enhancing existing water connection 0.1
=================================================== ===============
Total US$9.4
--------------------------------------------------- ---------------
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
Corporate Development
+44 207 478 3900
info@pdz.com.au
ABOUT THE DEBIENSKO HARD COKING COAL PROJECT
Debiensko is fully permitted with a 50-year mining concession,
established on-site facilities including rail, road and power
infrastructure, comprehensive historical drilling data and all
environmental consents. As a brownfield development project,
significant historical capital investment positions Debiensko to
become a meaningful, near-term regional hard coking coal
producer.
Following detailed technical due diligence by Prairie, the
Company is confident that a revised development approach would
allow for the early mining of profitable coal seams, whilst
minimising upfront capital costs. This is likely to include
focusing on a smaller area of Debiensko to target coal seams that
are more readily accessible. Prairie has proven expertise in
defining commercially robust projects and applying international
standards in Poland.
Coal Resource Estimate
Prairie previously announced a maiden hard coking Coal Resource
Estimate ("CRE") at Debiensko to support the ongoing Scoping Study
which targets the highest quality, most laterally extensive and
most readily accessible coal seams.
The CRE is reported in accordance with the JORC Code (2012) and
comprises 93 million tonnes ("Mt") in the Indicated Category as
part of a total CRE of 301Mt. The CRE is based on seven of the
thicker, more consistent hard coking coal seams within the
Debiensko licence area.
Table 2: Debiensko Hard Coking Coal Resource (air dried basis)
---------------------------------------------------------------------
Seam Indicated (Mt) Inferred (Mt) Total Coal Resource
In-Situ (Mt)
------- ------------------ ---------------- ----------------------
401/1 20 22 42
======= ================== ================ ======================
402/1 - 53 53
======= ================== ================ ======================
403/1 - 34 34
======= ================== ================ ======================
403/2 - 39 39
======= ================== ================ ======================
404/1 - 30 30
======= ================== ================ ======================
404/9 35 20 55
======= ================== ================ ======================
405 38 10 48
------- ------------------ ---------------- ----------------------
Total 93 208 301
------- ------------------ ---------------- ----------------------
* Rounding errors may occur
** The Indicated and Inferred Resource tonnage calculations are
reported with geological uncertainty of +/-10% and +/-15%
respectively
Coal Quality
Debiensko has attractive coal quality parameters, within all
seams, with the proven potential to produce high quality hard
coking coal. The resource estimate does not present washed coal
quality results but instead presents only raw unwashed coal
parameters.
Prairie has scrutinised the historical data and incorporated
data from the recently drilled Debiensko 12 borehole to produce
this estimate and confirm the hard coking coal quality.
Furthermore, the CRE focuses on seven of the thicker, more
laterally extensive coals. Further seams of potentially workable
thickness occur but are generally not laterally extensive enough to
warrant inclusion at this stage. Coal qualities for the target
seams are given in Table 3 below.
Table 3: Coal Quality Parameters at Debiensko
---------------------------------------------------------------------------------------------
Seam Parameters Indicated Inferred
------ ----------- ----------------------------------- -----------------------------------
Range Weighted Average Range Weighted Average
------ ----------- ---------------- ----------------- ---------------- -----------------
From To From To
------ ----------- ------- ------- ----------------- ------- ------- -----------------
401/1 Moisture% 0.33 1.24 0.68 0.45 1.25 0.60
------
Ash% 3.15 24.24 9.24 5.89 24.03 7.47
------
VM% 24.69 31.51 27.75 20.86 31.92 25.42
Sulphur% 0.37 1.60 0.74 0.48 1.58 0.63
GCV 26,478 34,082 31,416 26,543 33,584 32,881
------ ----------- ------- ------- ----------------- ------- ------- -----------------
402/1 Moisture% - - - 0.10 1.02 0.62
------
Ash% - - - 3.47 29.68 11.49
------
VM% - - - 19.36 31.61 25.28
Sulphur% - - - 0.27 2.18 0.72
GCV - - - 23,547 33,797 30,538
------ ----------- ------- ------- ----------------- ------- ------- -----------------
403/1 Moisture% - - - 0.35 1.02 0.66
------
Ash% - - - 3.73 23.74 11.52
------
VM% - - - 16.73 32.13 25.83
Sulphur% - - - 0.29 0.75 0.49
GCV - - - 27,511 32,627 31,017
------ ----------- ------- ------- ----------------- ------- ------- -----------------
403/2 Moisture% - - - 0.35 1.12 0.73
------
Ash% - - - 3.25 33.36 11.38
------
VM% - - - 23.64 31.28 26.75
Sulphur% - - - 0.40 1.87 0.67
GCV - - - 22,328 33,760 30,581
------ ----------- ------- ------- ----------------- ------- ------- -----------------
404/1 Moisture% - - - 0.25 1.10 0.65
------
Ash% - - - 6.50 27.38 12.89
------
VM% - - - 17.81 31.58 25.04
Sulphur% - - - 0.35 0.81 0.54
GCV - - - 25,432 33,025 30,012
------ ----------- ------- ------- ----------------- ------- ------- -----------------
404/9 Moisture% 0.56 0.76 0.68 0.53 0.86 0.69
------
Ash% 9.45 19.54 11.75 9.65 19.89 13.80
------
VM% 20.97 32.95 26.80 15.57 31.05 23.20
Sulphur% 0.20 1.14 0.60 0.20 1.14 0.41
GCV 29,145 32,516 31,269 29,067 32,748 30,604
------ ----------- ------- ------- ----------------- ------- ------- -----------------
405 Moisture% 0.35 1.09 0.65 0.48 0.87 0.65
------
Ash% 5.63 17.40 9.61 5.42 12.47 9.17
------
VM% 19.40 28.33 23.52 15.33 28.70 22.47
Sulphur% 0.29 0.48 0.35 0.27 0.93 0.37
GCV 29,760 34,137 32,198 31,538 34,113 32,427
------ ----------- ------- ------- ----------------- ------- ------- -----------------
All analyses are given on an air dried basis except for volatile
matter which is on a dry ash free basis.
A fully cored borehole was drilled by the previous owners in
2015/2016 and a suite of modern coking tests were performed on
select seams. Preliminary coal quality analysis from this borehole
indicates that a range of premium hard coking coals can be produced
from the Project that will be in high demand from European
steelmakers. Two premium hard coking coal specifications have been
delineated at Debiensko, namely Medium volatile matter hard coking
coal ("Mid-vol HCC") and Low volatile matter hard coking coal
("Low-vol HCC").
The borehole was fully cored to 30 m below seam 407/4. All core
was subject to detailed logging and core photography. Seam
thicknesses and depths have been confirmed by a suite of
geophysical logs while coal seams were analysed by accredited
laboratories in Poland.
Medium Volatile Matter Hard Coking Coal
The quality of Mid-vol HCC from Debiensko compares favourably
with the Australian Goonyella hard coking coal brand, and with
medium volatile coals produced in Poland today by JSW. This coal
features good rheological properties and coke yield, with
reasonably low sulphur levels. Prairie's assessment is that Mid-vol
HCC from the Debiensko project would receive premium pricing in
European and international markets.
Table 4: Debiensko Medium Volatile Matter Hard Coking
Coal Comparison to International Benchmarks
-------------------------------------------------------------------------------------------------------------------
Quality Debiensko* Goonyella Oaky Elkview Tuhup Pittston Borynia-JSW Pniowek-JSW
(Poland) (Australia) Creek (Canada) (Indonesia) (USA) (Poland) (Poland)
(Australia)
-------------- ---------- ------------ ------------ --------- ------------ -------- ----------- -----------
Ash (%) 3.2 8.9 9.5 9.5 7.0 8.0 8.5 8.5
-------------- ---------- ------------ ------------ --------- ------------ -------- ----------- -----------
Volatile
Matter
(%) 25.0 23.8 24.5 23.5 26.5 26.0 24.8 27.0
-------------- ---------- ------------ ------------ --------- ------------ -------- ----------- -----------
Sulphur
(%) 0.56 0.56 0.60 0.50 0.70 0.85 0.65 0.60
-------------- ---------- ------------ ------------ --------- ------------ -------- ----------- -----------
Phosphorous
(P) in
Coal (%) 0.025 0.025 0.070 0.07 0.02 0.019 0.059 0.050
-------------- ---------- ------------ ------------ --------- ------------ -------- ----------- -----------
Free Swelling
Index (FSI) 8 1/2 8 8 1/2 7 1/2 9 8 7 1/2 8 1/2
-------------- ---------- ------------ ------------ --------- ------------ -------- ----------- -----------
CSR (%) 63 66 67 70 60 - - -
-------------- ---------- ------------ ------------ --------- ------------ -------- ----------- -----------
Fluidity up to up to
(ddpm) 1200 1100 5000 150 450 - 2300 3000
-------------- ---------- ------------ ------------ --------- ------------ -------- ----------- -----------
C daf (%) 86 88.4 86.8 81.2 - 88.0 - -
-------------- ---------- ------------ ------------ --------- ------------ -------- ----------- -----------
Rv Max 1.23 1.17 1.10 1.22 1.18 1.10 1.20 1.10
-------------- ---------- ------------ ------------ --------- ------------ -------- ----------- -----------
Vitrinite
(%) 78 58 75 55 96 76 - -
-------------- ---------- ------------ ------------ --------- ------------ -------- ----------- -----------
Low Volatile Matter Hard Coking Coal
Debiensko's Low-vol HCC is similar to other internationally
traded low volatile matter hard coking coals, including brands such
as Peak Downs (BHP Billiton Mitsubishi Alliance - BMA) and Hail
Creek (Rio Tinto) produced in Australia. Whilst the Coke Strength
after Reaction (CSR) is anticipated to be slightly lower than these
Australian coals, the quality of Debiensko Low-vol HCC is
anticipated to be in-line with coal produced at JSW's Jas-Mos mine
in Poland, which is used as a stabilizing and leaning component of
nearly every coal blend for production of blast furnace coke in the
region.
Table 5: Debiensko Low Volatile Matter Hard Coking
Coal Comparison to International Benchmarks
-------------------------------------------------------------------------------------------------------------
Quality Debiensko* Peak German Hail Blue Buchanan Neryungri Jas-Mos
(Poland) Downs Creek Creek Creek (USA) (Russia) (Poland)
(Australia) (Australia) (Australia) - No.7
(USA)
-------------- ---------- ------------ ------------ ------------ ------- -------- --------- ---------
Ash (%) 9.5 10.0 9.5 8.9 9.0 5.3 10.0 7.8
-------------- ---------- ------------ ------------ ------------ ------- -------- --------- ---------
Volatile
Matter
(%) 20.5 20.5 19.0 20.5 19.9 18.7 19.3 21.4
-------------- ---------- ------------ ------------ ------------ ------- -------- --------- ---------
Sulphur
(%) 0.30 0.60 0.54 0.4 0.71 0.73 0.21 0.56
-------------- ---------- ------------ ------------ ------------ ------- -------- --------- ---------
Free Swelling
Index 7 1/2 8 1/2 8 1/2 7 8 1/2 8 1/2 8 7 1/2
-------------- ---------- ------------ ------------ ------------ ------- -------- --------- ---------
Fluidity
(ddpm) 128 275 400 300l 1113 100 18 200
-------------- ---------- ------------ ------------ ------------ ------- -------- --------- ---------
C daf
(%) 80 89.1 88.6 88.2 91 - 80.8 -
-------------- ---------- ------------ ------------ ------------ ------- -------- --------- ---------
Rv Max 1.5 1.40 1.45 1.26 1.48 1.63 1.50 1.40
-------------- ---------- ------------ ------------ ------------ ------- -------- --------- ---------
Vitrinite
(%) 59 68 73 54 70 76 81 -
-------------- ---------- ------------ ------------ ------------ ------- -------- --------- ---------
Forward Looking Statements
This report may include forward-looking statements. These
forward-looking statements are based on Prairie'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 Prairie, which could cause
actual results to differ materially from such statements. Prairie
makes no undertaking to subsequently update or revise the
forward-looking statements made in this release, to reflect the
circumstances or events after the date of that release.
Competent Person Statements
The information in this announcement that relates to
Infrastructure cost estimation is based on, and fairly represents,
information compiled or reviewed by Mr Stephen Newson, a Competent
Person who is a Fellow of the Institute of Materials, Minerals and
Mining (FIMMM). Mr Newson is employed by independent consultants
Royal HaskoningDHV. Mr Newson has sufficient experience that is
relevant to the style of mineralisation and type of deposit under
consideration and to the activity being undertaken to qualify as a
Competent Person as defined in the 2012 Edition of the
'Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves'. Mr Newson consents to the inclusion in
the report of the matters based on their information in the form
and context in which it appears.
The information in this announcement that relates to Exploration
Results and Coal Resources was extracted from Prairie's ASX
announcement dated 1 February 2017 entitled 'Maiden 301 Million
Tonnes Hard Coking Coal Resource Confirmed At Debiensko' which is
available to view on the company's website at www.pdz.com.au
The information in in the original ASX announcements that
relates Coal Resources is based on, and fairly represents,
information compiled or reviewed by Mr Jonathan O'Dell, a Competent
Person who is a Member of The Australasian Institute of Mining and
Metallurgy who is a consultant of the Company. Mr O'Dell has
sufficient experience that is relevant to the style of
mineralisation and type of deposit under consideration and to the
activity which he is undertaking to qualify as a Competent Person
as defined in the 2012 Edition of the 'Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore
Reserves'
Prairie confirms that: a) it is not aware of any new information
or data that materially affects the information included in the
original ASX announcements and; b) all material assumptions and
technical parameters underpinning the Coal Resource included in the
original ASX announcement continue to apply and have not materially
changed; c) the form and context in which the relevant Competent
Persons' findings are presented in this announcement has not been
materially modified from the original ASX announcement.
To see this announcement in full including all figures and
illustrations please refer to the 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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