Under a letter of intent signed by it and Canadian Forest Products, Cardero will charter the MV Williston Transporter to take metallurgical coal from its flagship complex in the Peace River district of northeast British Columbia to the railhead at Mackenzie, BC.

Transport will be performed with a tug and barge system via the Williston Reservoir.

“The vessel will be chartered by Cardero Coal, on a bareboat basis, in July 2014 for 18 months and will initially assist with transportation of mine construction plant and materials from Mackenzie railhead to the mine site,” officials said.

“Once initial coal has been produced, it is planned that the vessel will switch to metallurgical coal transportation from the mine site to Mackenzie. Since the vessel can be loaded directly from shore, it will not be necessary to complete construction of material handling systems prior to shipping the first product.”

When the arrangement expires in 2015, the producer is anticipating that its purpose-built tug and barge will be ready to be commissioned, and it will then transport coal through the remainder of the proposed mine life.

That vessel will likely be built in Mackenzie, the company said.

Under the transaction, the two will have two definitive agreements, one for the transporter use and the other a timber harvesting agreement for mine site logging prior to mine construction.

Cardero Coal will pay for the charter, though officials said it was projecting revenue from the site’s logging. No financial details were disclosed.

The company previously put out a request for qualifications to engineers with marine experience and those responses are under review.

It is anticipating a final design and tender process in the second quarter and completion in the early portion of the third quarter of this year.

The 360-foot, 7400-horsepower self-propelled Williston Transporter, meanwhile, is considered an interim solution during the producer’s construction, initial production and ramp-up of Carbon Creek.

It has a deadweight capacity of 4000 tonnes and has been in service since 1995 primarily for mining and forestry.

A November 2012 feasibility study report from Norwest confirmed the Carbon Creek deposit’s M&I resource at 468 million tonnes, up from 166 million tonnes.

The property’s established initial proven and probable reserves are 121Mt, pointing to an initial mine life of 20 years.

That report also found that, based on the results, the average clean coal production rate could be estimated at 4.1Mtpa, up notably from a prior projection of 2.9Mtpa between 2016 and 2034.

Coal production over Carbon Creek’s lifetime is expected to be about 78.4Mt, with 60% of planned output classified as hard coking coal. A previous estimate for HCC was 35%.

Including pre-production capital, it will take capital of $C475 ($US464) million to bring the project to full production.

Carbon Creek should have first coal by the first quarter of 2014 and be cashflow-positive within three years.