A prefeasibility study on the property, part of the company’s Kodiak coking coal project, confirmed the Australia-based company’s expectations for the American project.

The Kodiak project covers 11,700 acres and comprises two properties known as Gurnee and Seymour located in Alabama, US.

The project’s Coke no 1 mine on the Gurnee property was in operation until the end of 2008 when it was placed on care and maintenance.

Attila said it understood the reasons for this decision was underperformance by the mining contractors and ventilation issues due to inadequate mine planning and funding.

The PFS, conducted by Stagg Resource Consultants, examined re-commissioning the Coke no 1 mine, utilizing the existing infrastructure and transport logistics.

An underground room and pillar mining operation has been proposed and is expected to produce run of mine hard coking coal at its full capacity of 4Mtpa within five years.

Given the financial climate for funding mining operations, Atilla said it was considering a staged ramp-up of production whereby it could stagger its production profile.

A three-section mine could operate in the main “Coke” seam for a period of five years before beginning development in the secondary “Atkins” seam, Attila said.

“Such a scenario would alleviate the need for costly ventilation shafts and declines while still taking advantage of the established infrastructure and development already in place and maintaining lowest quartile cash costs,” the company said in the Tuesday announcement.

Approximately 5Mt of clean coal would be produced over the five years at a rate of 0.8-1.04Mtpa at an estimated all-in cash cost of approximately $US90 per ton.

Cash flow from mining at the Coke seam would be utilized to commence mining at the Atkins seam and increase to the full production rate of 4Mtpa ROM coal.

The PFS incorporates the Coke and Atkins coal seams, which are estimated to contain approximately 34.7Mt and 38.2Mt coal respectively in the combined JORC classifications of measured and indicated coal resources.

Access to both the coal seams in the PFS mine plan is to be achieved using the existing portals and a portion of the underground workings in the Coke no 1 mine, which was closed and sealed in December 2008.

A pre-production stage would exist for the rehabilitation of the existing entries and the development of new entries.

Access to the Atkins coal seam is proposed to be accomplished by driving a decline from the Coke seam and then developing two sets of parallel main entries that are congruent with the overlying Coke seam mains, from which sub-mains and development panels would also be developed across the seams.

Three dual-miner sections are proposed for operation in each of the Coke and Atkins coal seams, with each section consisting of two continuous miners, three haulage cars, two roof bolters and the requisite support equipment.

ROM coal is to be transported from the mine portal to the preparation plant by an overland conveyor system.

Similarly, clean coal from the preparation plant is to be transported by overland conveyor to the existing rail load-out.

Coal is expected to be transported from the rail load-out to the port of Mobile. Based on initial discussions with the rail provider there is 15-20Mtpa of available capacity.

Attila is also in discussions with three terminal operators at the port of Mobile, all of which have ample capacity.

Total upfront funding of only $US52.1 million would be required after leasing all of the equipment and machinery.

The total capital expenditure for the first three model years is $181.3 million.

The key driver of low capital expenditure is the utilization of the significant infrastructure already in place at Attila’s Kodiak project, including wash plant and heavy media circuit, power substation, a heavy gauge rail line running through the Kodiak property and a load-out facility onsite, a warehouse with inventory, workshop, office facilities and water storage and associated infrastructure.

The project has all the approvals it needs except for a new Mine Safety and Health Administration identification number, which will entail the submission of ground control, ventilation and roof control plans.

With the completion of the PFS, Attila will focus on moving the Kodiak coking coal project through the bankable feasibility stage with particular focus on improving the preparation yields and gaining the ability to sell a middling’s fraction.

“Improvements in both of these areas have the potential to substantially reduce the already low operating costs and improve revenues,” Attila said.

In addition, upside potential exists for integrating Attila’s Seymour property for increased scale, either on start-up or once Gurnee is in production.

Attila has commenced a program to identify funding sources for the project but at this stage it remains “offtake free”