Indonesian company PT Mining was chosen for its proficiency in thin-seam mining and is already undertaking pre-drilling to finalise the mine plan.

Mining equipment is expected to be mobilized on site shortly with production re-starting next month.

B2 has a target production rate of 360,000 tonnes per annum.

Orpheus says a JORC coal resource of 950,000t (indicated) and 180,000t (inferred) will provide an initial mine life at B2 of about three years.

The deal with PT Mining comes after a lengthy assessment on how the mine would optimally resume production.

It was determined that the most cost efficient, lowest risk and profitable strategy was to appoint a contractor under a royalty arrangement.

Orpheus executive chairman Wayne Mitchell said he was pleased with the agreement and noted that his company would not be responsible for any capital, operating or coal marketing expenses.

“We can now recommence production at B2, and the royalty arrangement means the company assumes no financial risk with the royalty going straight to Orpheus’ bottom line,” he said in a statement.

“This development progresses our Indonesian coal strategy of rapidly ramping up production in Kalimantan.

“Together with our Kintap ADK project, which is currently producing 50,000 tonnes per month, Orpheus will soon be producing at the rate of 80,000t per month (net 40,000t to Orpheus) once B2 resumes mining.”

In March 2012, Orpheus secured a 50% interest in PT Mega Coal’s ADK operating coal mine located in South Kalimantan.

ADK has been in production since April 2011 and has shipped 95,000t shipped over the past three months.