According to the National Instrument 43-101-compliant PEA prepared and submitted to the company by retained engineer consultant Norwest, the operation southeast of Tumbler Ridge could produce 122 million metric tons of hard coking coal over a lifespan of about 31 years.
Colonial is planning a combined open-pit and underground operation at Huguenot. Norwest has already indicated that plan and provided scoping-level cost estimated and economic analyses.
In its report, it said the surface portion of mining could extend for the first 14 years, with years three through 31 ideal for underground mining.
Measured and indicated in-situ coal resources total 277.7 million tonnes. Of that, 132Mt is surface mineable and another 145.7Mt underground mineable. That represents a 46.6% increase over previous estimates for the two resource categories.
Inferred resources total an additional 119.2Mt, 500,000t surface mineable and 118.7Mt underground mineable.
Norwest also said the planned miner had an indicative after-tax (and royalty) net present value of $US1.1 ($A1.17) billion at a 7.5% discount rate, or $US1.57 billion NPV at a 5% discount rate, at a base-case coal price of $US192.50 per tonne.
In all, the Huguenot project has total projected clean coal production of 89Mt over its mine life, the consultant reported, and projected clean coal production from combined surface and underground operations range between 1.4Mtpa and 5.9Mtpa, averaging about 3Mtpa.
Colonial said it assumed Huguenot would be connected by rail to an existing rail line south of Tumbler Ridge, with a third party constructing the link but the producer paying for the costs annually.
It has also projected other potential projects along the extended rail corridor would come online at about the same time as the complex, allowing for shared costs between several users.
Norwest said that, as a result of its evaluation, initial capital costs of the mine had been significantly reduced with the assumption that major equipment items for surface mining would be leased.
Pre-production capital cosst for the proposed underground mine are estimated to be $US387 million, including a 15% contingency allowance, with additional sustaining capital of $US186 million over the mine’s life.
