Key highlights of the updated PFS include an after-tax net present value of $US410 million, IRR of 92% and projected cumulative free cash-flow over a 20-year mine life of $1.38 billion.
This is based on the development of an underground mining operation using the bord-and-pillar mining method, with average production of 2.6 million tonnes per annum and an upfront capital cost of $64 million, including an overall 15% contingency.
This methodology allows for shallower coal seams to be mined than previously anticipated, and for several coal seams to be mined simultaneously which was not possible under the longwall method. This has added a further 13Mt (33%) to the project and increased the mine life from 15 years to 20 years.
This has provided Balamara with the impetus to commence preparatory works to undertake a definitive feasibility study (DFS) at Mariola 1.
The company is currently permitting several holes required to commence a final drilling programme at Mariola 1 as a necessary step prior to commencing a DFS, although other parts of that study which are not dependent on this drilling may begin earlier.
Balamara has already commenced the pre-feasibility study for the Mariola 2 concession, which is located just 4km from Mariola 1, and the parameters of the commercial enterprise there are expected to be comparable to its neighbour.
The company’s intention is ultimately to merge the two Mariola concessions into one larger Mariola Project DFS in the first half of 2016 with completion targeted for 3Q 2016 and decision to mine thereafter.
Balamara managing director Mike Ralston said: “This significant increase in the economic value of the Mariola 1 Project is a testament to our ongoing commitment to unlock further value from our extensive asset portfolio in southern Poland.
“The compelling project economics for Mariola 1 justify a rapid development pathway, with this large-scale thermal coal development expected to underpin the first phase of production from our Polish coal portfolio.”
The Mariola project is located close to existing infrastructure and near to 14 operating power stations within a 125km radius, all located in the Upper Silesian Coal Basin of Poland. The high quality thermal coal is ideal for use in these power stations and Balamara anticipates selling all of its coal internally in Poland, or regionally within Europe.
