TIDMPDZ
RNS Number : 0630V
Prairie Mining Limited
31 October 2017
PRAIRIE MINING LIMITED
NEWS RELEASE | 31 October 2017
SEPTEMBER 2017 QUARTERLY REPORT
HIGHLIGHTS
Debiensko Mine (Premium Hard Coking Coal)
Geo-technical Drill Program Underway
-- In preparation for the upcoming next phase of project
studies, a shallow geo-technical drill program was completed at
Debiensko during the quarter.
-- Results will be used for detailed design and engineering of
surface structures associated with the shafts, coal handling and
preparation plant and other surface facilities during the upcoming
feasibility study.
Mine Site Redevelopment Program Update
-- Focus during the quarter has been on planning the mine site's
redevelopment program, including:
Ø preparation for an in-fill drill program to increase JORC
Measured and Indicated resources to support future feasibility
studies;
Ø initial demolition works; and
Ø pre-qualification of study contractors.
Offtake Discussions Advance
-- Prairie continued discussions with regional steel makers and
coke producers for future coking coal sales and offtake.
-- Highly favourable market fundamentals remain prominent as
Europe's steel industry continues to consume 47 Mt of hard coking
coal annually, 85% of which is imported.
Jan Karski Mine (Semi-Soft Coking Coal)
Transformational Coking Coal Quality Results
-- Coal quality results from latest drilling have transformed
Jan Karski into a high-value ultra-low ash semi-soft coking coal
project.
-- Updated marketing and coal sales strategies have begun in the
quarter following Prairie's latest successful drilling results with
Jan Karski's semi-soft coking coal product expected to attract a
10% premium to international benchmark prices. Marketing and coal
sales are strategies to be used in preliminary offtake discussions
between Prairie and steel makers.
China Coal Studies Near Completion
-- China Coal's studies for the development of the Jan Karski
Mine have significantly advanced and will incorporate the coal
quality results from the latest drilling at Jan Karski. Studies are
due to be finalised in the coming months.
-- Under the Strategic Co-operation Agreement between Prairie
and China Coal, the studies will support China Coal's EPC contract
to construct the Jan Karski Mine and will underpin a Chinese bank
financing package.
Jan Karski Most Advanced Coking Coal Project in Northern
Hemisphere
-- Spatial development plan approved at Jan Karski meaning the
rezoning of 56 hectares of agricultural land for industrial use is
complete allowing for construction of a mine site, shafts and
associated surface infrastructure.
-- Prairie remains on track to submit a Mining Concession
application for Jan Karski in the coming months following
submission of the Environmental and Social Impact Assessment during
October 2017.
Robust Coking Coal Fundamentals
Strong Price Environment Continues
-- Coking coal price environment has remained strong throughout
the quarter attributed to strong cash margins of Chinese steel
mills, production cuts by some Chinese miners, and production
disruptions in Australia.
Coking Coal Reconfirmed as a Critical Raw Material for
Europe
-- In Europe, coking coal remains on the European Commission's
2017 revised list of Critical Raw Materials as European steel
makers - including the newly-formed ThyssenKrupp Tata Steel Joint
Venture - look to supply a changing automobile industry and
numerous infrastructure programs.
o Increasing demand for ultra-low emission vehicles is expected
to drive growth in steel supply to the European automobile industry
- almost 0.5 tonnes of coking coal are required to produce the
structural, electrical and plated steel for each electric car.
o UK infrastructure projects including the High Speed 2 Rail
Line and the construction of the Hinkley Point C Nuclear Power
Station are expected to use over 3 million tonnes of steel -
equivalent to 375 London Olympic Stadiums.
o According to BHP Billiton, China's Belt and Road Initiative to
advance globalisation and trading - and which includes several
European countries including Poland - could result in up to 150
million tonnes of incremental steel demand.
-- Prairie's two large-scale Tier One assets are ideally
positioned to supply coking coal to meet Europe's steel demand in
the future.
Corporate
-- Prairie and CD Capital completed an additional investment of
US$2.0 million (A$2.6 million) in the form of non-redeemable,
non-interest-bearing convertible loan notes.
-- Prairie has cash reserves of A$17 million. With CD Capital's
right to invest a further A$55 million as a cornerstone investor,
plus with the Strategic Co-operation Agreement Prairie has with
China Coal for financing and construction of Jan Karski, Prairie is
in a strong financial position to progress with its planned
development activities at Debiensko and Jan Karski.
Ben Stoikovich, Chief Executive Officer commented "Following
coal quality testing that demonstrated premium quality ultra-low
ash semi-soft coking coal at Jan Karski, it is clear that we hold
one of the most advanced coking coal projects of significant scale
in the Northern Hemisphere. Alongside our partner China Coal, we
are nearing completion of all requisite studies required to
facilitate already advanced discussions with Chinese debt
providers. Jan Karski's development will provide substantial
economic and social benefits for Eastern Poland and we look forward
to submitting our Mining Concession application shortly. At
Debiensko, we continue works in order to restart the mine at a time
when long term coking coal supply has become increasingly important
to the European steel industry."
For further information, please contact:
Prairie Mining Limited +44 20 7478 3900
Ben Stoikovich, Chief info@pdz.com.au
Executive Officer
Sapan Ghai, Head of
Corporate Development
Debiensko MINE
The Debiensko Mine ("Debiensko") is a fully permitted, hard
coking coal project located in the Upper Silesian Coal Basin in the
south west of the Republic of Poland. It is approximately 40 km
from the city of Katowice and 40 km from the Czech Republic.
Debiensko is bordered by the Knurow-Szczyglowice Mine in the
north west and the Budryk Mine in the north east, both owned and
operated by Jastrz bska Spó ka W glowa SA ("JSW"), Europe's leading
producer of hard coking coal.
The Debiensko mine was originally opened in 1898 and was
operated by various Polish mining companies until 2000 when mining
operations were terminated due to a major government led
restructuring of the coal sector caused by a downturn in global
coal prices. In early 2006 New World Resources Plc ("NWR") acquired
Debiensko and commenced planning for Debiensko to comply with
Polish mining standards, with the aim of accessing and mining hard
coking coal seams. In 2008, the Minister of Environment of Poland
("MoE") granted a 50-year mine license for Debiensko.
In October 2016, Prairie ("Prairie" or "Company") acquired
Debiensko with a view that a revised development approach would
potentially allow for the early mining of profitable premium hard
coking coal seams, whilst minimising upfront capital costs. Prairie
has proven expertise in defining commercially robust projects and
applying international standards in Poland. The fact that Debiensko
is a former operating mine and its proximity to two neighbouring
coking coal producers in the same geological setting, reaffirms the
significant potential to successfully bring Debiensko back into
operation.
Premium Quality Hard Coking Coal
Preliminary analysis indicates that a range of premium hard
coking coals that will be in high demand from European steelmakers
can be produced from Debiensko. This analysis is based on
historical data, neigbouring operational coking coal mines and the
results of a suite of modern coking tests performed on selected
seams from a fully cored borehole drilled by the previous owners in
2015/16. Two premium hard coking coal specifications have been
delineated from select seams at Debiensko, namely Medium volatile
matter hard coking coal ("Mid-vol HCC") and Low volatile matter
hard coking coal ("Low-vol HCC"). Future study phases will
determine the precise Debiensko premium hard coking coal quality
specification on a year by year basis depending on final adopted
mine plan, mining schedule and extent of coal blending.
Both Debiensko's Mid-vol and Low-vol HCC lie within the range of
premium hard coking coals produced globally. Indications are that
the Mid-vol HCC at Debiensko is present between 850 m to 1,000 m
from surface and the Low-vol HCC is present 1,000 m to 1,300 m
below surface i.e. at depths similar to adjacent operating mines
owned by JSW - the largest coking coal producer in Europe.
Preparation for the Next Phase of Project Studies
Drilling of 28 shallow geo-technical holes completed during the
quarter. Information from the drill holes will be used for
engineering design of foundations for structures associated with
the shafts, coal handling and preparation plant ("CHPP") and other
surface facilities. These holes are essential in order to assess
the soil conditions, properly design structural foundations and
thus provide more accurate pricing in the tenders as required for a
feasibility study.
Pre-qualification of contractors for the major components of the
next phase of Debiensko studies commenced during the quarter
including:
-- Drilling contractors for the planned in-fill drilling program
(to update measured and indicated resources);
-- CHPP;
-- Shafts and bulk coal winder;
-- Desalination plant; and
-- Surface facilities.
The tender process for construction of the desalination plant is
now underway with final specifications near completion.
Demolition of old surface structures of the former Debiensko
mine including the bathhouse, switchgear building and locomotive
garage was completed during the quarter. Further structures
including walkways and old administrative buildings have been
earmarked for demolition during the following quarter.
JAN KARSKI MINE
Transformational Coking Coal Quality Results Establish Jan
Karski as a High Value Ultra-Low Ash Semi-Soft Coking Coal Mine
Following the latest drilling results at the Jan Karski Mine
("Jan Karski"), Prairie announced coal quality testwork which
confirmed the mine to be a high-value ultra-low ash semi-soft
coking coal ("SSCC") project. An Independent assessment by
specialist coking coal market consultants predicts that Jan Karski
ultra-low ash SSCC would potentially realise a 10% premium to
international benchmark prices.
Preliminary discussions between Prairie and select European
steel makers have confirmed the suitability of ultra-low ash SSCC
to be utilised in coke oven blends. Consequently, the Company is
currently updating the marketing and sales strategy for the coal
which will be produced at Jan Karski and will incorporate this
strategy into the studies.
China Coal Progress and Financing Discussions
In November 2016, Prairie and China Coal, China's second largest
coal mining company and one of the world's most advanced and
prolific shaft sinking and underground coal mine construction
companies signed a landmark Strategic Co-operation Agreement for
the financing and construction of the Jan Karski Mine.
Under the terms of the agreement China Coal is set to complete
all studies ("Studies") required by Chinese financing institutions
earmarked to provide financing for the construction and development
of Jan Karski. Drafts of the Studies were submitted to Prairie in
the previous quarter following which the Company hosted two
delegations in Poland from China including: leading underground
mine construction company and partner of Prairie, China Coal No.5
Construction Company Ltd. ("CC5C"); Chinese Government's officially
authorised coal mine design institute Jinan Mine Design Institute
("Jinan"); and China's first large scale foreign trade corporation
specialising in international engineering contracting, China
National Machinery Import & Export Corporation ("CMC").
The Chinese delegations were welcomed by the
government-appointed Governor of Lublin Province and elected
regional government officials of the Lublin region. Prairie
conducted various site visits and facilitated meetings with
domestic Polish contractors and suppliers who could participate in
the construction of Jan Karski.
Prairie and China Coal's technical teams continue to work
together to:
-- agree a final version of the Studies which will form the
basis of Chinese bank credit approval for funding construction of
Jan Karski;
-- enter into a complete Engineering, Procurement, and
Construction ("EPC") contract under which CC5C to construct Jan
Karski; and
-- 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.
Spatial Planning (Rezoning) Approval
Following completion of community consultation and submission by
Prairie of all applications required to change the local spatial
development plan to affect the rezoning of land for mining use, the
Gmina (Municipality) of Siedliszcze officially adopted a new
spatial development plan that will allow for the construction of
the Jan Karski mine site in the location of Kulik.
The Resolution of the Town Council of Siedliszcze on to adopt
the zoning plan was passed during the quarter completing yet
another significant milestone towards Prairie obtaining a Mining
Concession for Jan Karski.
The spatial planning approval process was conducted in parallel
with approval by Poland's Ministry of Agriculture for the rezoning
of 56 hectares of agricultural land to be designated for industrial
(mining) purposes. These 56 hectares are in the Kulik area where
the Jan Karski mine shafts and major surface facilities will be
located, as per the approved Jan Karski Deposit Development Plan
("DDP") and the ongoing China Coal Bankable Feasibility Study.
Spatial planning approval was granted following the achievement
by Prairie of another significant permitting milestone following
official approval by the Lublin Regional Mining Authority of the
Jan Karski DDP in May 2017 (refer to ASX announcement dated 25 May
2017).
Prairie remains on track to have its full application for a
Mining Concession submitted for Jan Karski in the coming months. In
Poland, a Mining Concession application comprises the approval of a
DDP, a spatial development plan (rezoning of land for mining use),
and an Environmental Social Impact Assessment ("ESIA") in the form
of an Environmental Consent decision.
Jan Karski's DDP and Spatial Development Plan have now been
officially approved and the ESIA was submitted following the
quarter end. Granting of the Environmental Consent will fulfil all
the regulatory prerequisites for the Company to submit a formal
Mining Concession application.
CORPORATE
Additional Investment by CD Capital
In August 2017 following shareholder approval, Prairie completed
the second convertible note investment with its cornerstone
investor CD Capital Natural Resources Fund III LP ("CD Capital").
In July 2017, final investment terms were agreed for Prairie to
issue a non-redeemable, non-interest-bearing, unsecured convertible
loan notes for an aggregate principal amount of US$2.0 million
(A$2.6 million) to CD Capital.
Financial Position
Prairie has cash reserves of A$17 million. With CD Capital's
additional U$2 million (A$2.6 million) investment now completed and
their right to invest a further A$55 million as a cornerstone
investor, plus with the Strategic Co-operation Agreement Prairie
has with China Coal for financing and construction of Jan Karski,
Prairie is in a strong financial position to progress with its
planned development activities at Debiensko and Jan Karski.
Forward Looking Statements
This release 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.
APPIX 1 - EXPLORATION TENEMENT INFORMATION
As at 30 September 2017, the Company has an interest in the
following tenements:
Location Tenement Percentage Interest Status Tenement Type
------------------- ------------------------------- -------------------- -------- --------------------------------
Jan Karski, Poland Jan Karski Mine Plan Area 100 Granted Exclusive Right to apply for a
(K-4-5, K-6-7, K-8 and K-9)* mining concession
Jan Karski, Poland Kulik (K-4-5) 100 Granted Exploration
Jan Karski, Poland Syczyn (K-8) 100 Granted Exploration
Jan Karski, Poland Kopina (K-9) 100 Granted Exploration
Jan Karski, Poland Sawin-Zachód 100 Granted Exploration
Debiensko, Poland Debiensko 1** 100 Granted Mining
Debiensko, Poland Kaczyce 1 100 Granted Mining & Exploration (includes
gas rights)
------------------- ------------------------------- -------------------- -------- --------------------------------
* On 1 July 2015, the Company announced that it had secured the
Exclusive Right to apply for, and consequently be granted, a mining
concession for Jan Karski. As a result of its geological
documentation for Jan Karski deposit being approved, Prairie is now
the only entity that can lodge a mining concession application over
Jan Karski within a three (3) year period.
The approved geological documentation covers an area comprising
of all four of the original exploration concessions granted to
Prairie (K-4-5, K-6-7, K-8 and K-9) and includes the full extent of
the targeted resources within the mine plan for Jan Karski. In this
regard, no beneficial title interest has been surrendered by the
Company when the K-6-7 exploration concession expired during the
quarter. The Company intends to submit a mining concession
application, over the mine plan area at Jan Karski (which includes
K-6-7) within the next 12 months. Under Polish mining law, and
owing to the Exclusive Right the Company has secured, Prairie is
the only entity that may apply for and be granted a mining
concession with respect to the K-6-7 area (the Exclusive Right also
applies to the K-4-5, K-8 and K-9 areas of Jan Karski). There is no
requirement for the Company to hold an exploration concession in
order exercise the Exclusive Right and apply for a mining
concession.
** Under the terms of the Debiensko Mining Concession issued in
2008 by the MoE (which is valid for 50 years from grant date),
commencement of production is to occur by 1 January 2018. Not
commencing production by 2018 will not infringe on the validity and
expiry date (June 2048) of the Mining Concession, however in
December 2016, the Company did make an application to the MoE to
amend the Debiensko Mining Concession to alter the date for
commencement of production from 2018 to 2025 with a decision still
pending.
To view this announcement in full including all illustrations
and figures please refer to www.pdz.com.
+Rule 5.5
Appendix 5B
Mining exploration entity and oil and gas exploration entity
quarterly report
Introduced 01/07/96 Origin Appendix 8 Amended 01/07/97,
01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/13, 01/09/16
Name of entity
-------------------------------------------
PRAIRIE MINING LIMITED
-------------------------------------------
ABN Quarter ended ("current
quarter")
--------------- ------------------------
23 008 677 852 30 September 2017
--------------- ------------------------
Consolidated statement Current quarter Year to date
of cash flows $A'000
(3 months)
$A'000
--------------------------------------- ---------------- -------------
1. Cash flows from operating
activities
1.1 Receipts from customers - -
1.2 Payments for
(a) exploration & evaluation (1,456) (1,456)
(b) development - -
(c) production - -
(d) staff costs (605) (605)
(e) administration
and corporate costs (240) (240)
1.3 Dividends received - -
(see note 3)
1.4 Interest received 119 119
1.5 Interest and other - -
costs of finance paid
1.6 Income taxes paid - -
1.7 Research and development - -
refunds
Other (provide details
1.8 if material) (317) (317)
(a) Business development
costs 141 141
(b) Property rental
and gas sales
---------------- -------------
Net cash from / (used
1.9 in) operating activities (2,358) (2,358)
----- -------------------------------- ---------------- -------------
2. Cash flows from investing
activities
2.1 Payments to acquire:
(a) property, plant
and equipment (22) (22)
(b) tenements (see - -
item 10)
(c) investments - -
(d) other non-current - -
assets
2.2 Proceeds from the disposal
of:
(a) property, plant
and equipment - -
(b) tenements (see - -
item 10)
(c) investments - -
(d) other non-current - -
assets
2.3 Cash flows from loans - -
to other entities
2.4 Dividends received - -
(see note 3)
2.5 Other (provide details - -
if material)
---------------- -------------
Net cash from / (used
2.6 in) investing activities (22) (22)
------- ------------------------------ ---------------- -------------
3. Cash flows from financing
activities
3.1 Proceeds from issues
of shares - -
Proceeds from issue
3.2 of convertible notes 2,627 2,627
3.3 Proceeds from exercise - -
of share options
Transaction costs related
to issues of shares,
convertible notes or
3.4 options (179) (179)
3.5 Proceeds from borrowings - -
3.6 Repayment of borrowings - -
3.7 Transaction costs related - -
to loans and borrowings
3.8 Dividends paid - -
Other (provide details
3.9 if material) 66 66
---------------- -------------
Net cash from / (used
3.10 in) financing activities 2,514 2,514
------- ------------------------------ ---------------- -------------
4. Net increase / (decrease)
in cash and cash equivalents
for the period
Cash and cash equivalents
4.1 at beginning of period 16,809 16,809
Net cash from / (used
in) operating activities
4.2 (item 1.9 above) (2,358) (2,358)
Net cash from / (used
in) investing activities
4.3 (item 2.6 above) (22) (22)
Net cash from / (used
in) financing activities
4.4 (item 3.10 above) 2,514 2,514
4.5 Effect of movement
in exchange rates on - -
cash held
---------------- -------------
Cash and cash equivalents
4.6 at end of period 16,943 16,943
------- ------------------------------ ---------------- -------------
5. Reconciliation of cash Current quarter Previous
and cash equivalents $A'000 quarter
at the end of the quarter $A'000
(as shown in the consolidated
statement of cash flows)
to the related items
in the accounts
---- ------------------------------- ---------------- ---------
5.1 Bank balances 5,443 4,809
5.2 Call deposits 11,500 12,000
5.3 Bank overdrafts - -
5.4 Other (provide details) - -
---------------- ---------
Cash and cash equivalents
at end of quarter (should
5.5 equal item 4.6 above) 16,943 16,809
---- ------------------------------- ---------------- ---------
6. Payments to directors of the entity Current quarter
and their associates $A'000
----------------
Aggregate amount of payments to
these parties included in item
6.1 1.2 (284)
----------------
6.2 Aggregate amount of cash flow Nil
from loans to these parties included
in item 2.3
----------------
6.3 Include below any explanation necessary
to understand the transactions included
in items 6.1 and 6.2
---- --------------------------------------------------------
Payments include executive remuneration (including
bonuses), director fees, superannuation and
provision of a fully serviced office.
--------------------------------------------------------------
7. Payments to related entities of Current quarter
the entity and their associates $A'000
----------------
7.1 Aggregate amount of payments to -
these parties included in item
1.2
----------------
7.2 Aggregate amount of cash flow -
from loans to these parties included
in item 2.3
----------------
7.3 Include below any explanation necessary
to understand the transactions included
in items 7.1 and 7.2
---- --------------------------------------------------------
Not applicable
--------------------------------------------------------------
8. Financing facilities Total facility Amount drawn
available amount at at quarter
Add notes as necessary quarter end end
for an understanding $A'000 $A'000
of the position
--------------- -------------
8.1 Loan facilities - -
--------------- -------------
8.2 Credit standby arrangements - -
--------------- -------------
8.3 Other (please specify) - -
--------------- -------------
8.4 Include below a description of each facility
above, including the lender, interest rate
and whether it is secured or unsecured.
If any additional facilities have been entered
into or are proposed to be entered into
after quarter end, include details of those
facilities as well.
---- ------------------------------------------------------------
9. Estimated cash outflows $A'000
for next quarter
---- ------------------------------ --------
9.1 Exploration and evaluation (1,500)
9.2 Development -
9.3 Production -
9.4 Staff costs (500)
Administration and corporate
9.5 costs (200)
Other (provide details if
material)
(a) Business development
9.6 costs (150)
--------
9.7 Total estimated cash outflows (2,350)
---- ------------------------------ --------
10. Changes in Tenement Nature of Interest Interest
tenements reference interest at beginning at end
(items 2.1(b) and location of quarter of quarter
and 2.2(b)
above)
----- ---------------------- -------------- ---------- -------------- ------------
10.1 Interests - - - -
in mining
tenements
and petroleum
tenements
lapsed, relinquished
or reduced
----- ---------------------- -------------- ---------- -------------- ------------
10.2 Interests - - - -
in mining
tenements
and petroleum
tenements
acquired
or increased
----- ---------------------- -------------- ---------- -------------- ------------
Compliance statement
1 This statement has been prepared in accordance with accounting
standards and policies which comply with Listing Rule 19.11A.
2 This statement gives a true and fair view of the matters disclosed.
[lodged electronically without signature]
Sign here:
............................................................ Date:
31 October 2017
(Director/Company secretary)
Print name: Dylan Browne
Notes
1. The quarterly report provides a basis for informing the
market how the entity's activities have been financed for the past
quarter and the effect on its cash position. An entity that wishes
to disclose additional information is encouraged to do so, in a
note or notes included in or attached to this report.
2. If this quarterly report has been prepared in accordance with
Australian Accounting Standards, the definitions in, and provisions
of, AASB 6: Exploration for and Evaluation of Mineral Resources and
AASB 107: Statement of Cash Flows apply to this report. If this
quarterly report has been prepared in accordance with other
accounting standards agreed by ASX pursuant to Listing Rule 19.11A,
the corresponding equivalent standards apply to this report.
3. Dividends received may be classified either as cash flows
from operating activities or cash flows from investing activities,
depending on the accounting policy of the entity.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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