The Donkin Coal Alliance – 25% owned by Erdene and 75% by Xstrata – is focused on planning continuous miner exploration, an interim step to development of a longwall.

Erdene said tenders for all major equipment for the phase had been received and were under evaluation.

Discussions were continuing for the sale of coal produced from the continuous miner exploration, a requirement of advancing the project.

It is expected the continuous miners will produce more than 250,000 tonnes annually.

“If the project is approved, it has the potential to reinvigorate the mining industry in Cape Breton,” Erdene said.

Erdene chief executive Peter Akerley said the company was witnessing a major upswing in coal interest and was finding itself in a “strong position to advance the Donkin coal project to the first phase of production”

The project will initially create 50 direct jobs and, with approval to advance to longwall mining, 275 full-time positions at full production will be created over a mine life of 30 years.

In addition, at least 1.5 indirect jobs are expected to be created for each full-time position.

Besides the $50 million to be spent on the continuous miner phase and the $25 million already spent, another $350 million in privately funded capital will be required for the full longwall development.

Direct employment on the project to date has varied from six to 23 people and enabled 11 skilled mining people to return to Cape Breton.

Six personnel remain onsite to cover the necessary requirements for care and maintenance, including regular statutory inspections.

The Donkin coal resource includes 227 million tonnes of indicated and 254Mt of inferred high volatile-A bituminous, high sulfur and medium-ash coal.

The project is 35 kilometres from a coal-fired electrical generating plant and a deepwater coal terminal facility.

Markets are anticipated to be both domestic and export, with relatively short shipping distances by water to the United States east coast and Europe.

Work on the site has been underway for three years, starting with the reopening of the tunnels and site preparation for the dewatering and the tunnel rehabilitation work.

The Donkin team has successfully reclaimed the 7000m twin tunnels, involving the pumping of 450 million litres of water which was managed and treated onsite.

The work also included testing the coal quality and gas regime through in-seam drilling.

Besides its local interests, Erdene has also focused its coal efforts in Mongolia but political instability has pushed the explorer to remain cautious.

However, Akerley said the signing of an investment agreement by the Mongolian government over the Oyu Tolgoi project marked a positive change.

“This has given us the confidence to accelerate our property acquisition program in Mongolia," he said.

Recently, Erdene applied for five exploration licences over 400,000 hectares and has plans to continue to increase its staking and acquisition activity.

In Mongolia, Erdene is partnered with Xstrata Coal, which is fully funding the exploration programs through to completion of feasibility to earn a 75% interest.