Published in the June 2014 International Coal News Magazine

Previously, he joined Australian Char in 2000 and was seconded to work for the Griffin Coal Mining Company late that year, working on a variety of projects.

These included trial shipments of coal to export markets, carbonisation and coking trials, evaluation of coal-drying technologies and various business development activities associated in the sector. He spoke to Lou Caruana about the Queensland coal industry.

You’re originally from Western Australia, so how did you become involved in the coal mining industry instead of iron ore, like a lot of other Sandgropers?

I grew up in Collie in the south of WA, a long way from the Pilbara. Collie has the only producing coalfield in WA. Relatively small by east coast standards, the two mining companies produce in the order of 6 million tonnes of coal per year. It’s fairly natural for people from Collie to work in the mining industry either at the coal mines, power stations or Worsley Alumina.

So now you’re in the eastern states, do you prefer a schooner or a pot of beer?

Schooner these days or a nice cold stubby of Peroni on a hot day takes a bit of beating … but I do miss good old Swan Draught.

Have you converted to rugby or do you still prefer AFL?

Definitely prefer the AFL – big fan of the West Coast Eagles. I like rugby league and follow the Roosters.

Cuesta recently announced a 92% resource increase at its flagship Moorlands project in Queensland. What does this mean for the company?

Throughout the past 14 months, Cuesta has continued to fast-track the development of the Moorlands Project, which includes the completion of a scoping study, background environmental studies and a 50-hole exploration program. The culmination of these activities resulted in the 92% resource at Moorlands – which marks a significant milestone for the company.

The significant resource increase also is a testament to the longevity of the Moorlands deposit. The three-dimensional geological model that produced the resource estimate will be used for both the feasibility study and the maiden reserve calculation that will be announced shortly.

Do you envisage a contractor operation?

Cuesta prefers the utilisation of quality contractors for our operations at Moorlands. That being said, we will obviously have Cuesta staff onsite to oversee these operations. We have exploration geologists who oversee a variety of contractors for our exploration activities, including drilling, logging and rehabilitation.

Are you getting good rates for drillers these days?

They used to be rare as the proverbial hen’s teeth in the Bowen Basin once. They were definitely rare as hen’s teeth a few years ago, but due to a slowdown across the board in exploration activities in Queensland, there is good availability of rigs and drillers today.

What is the consistency of the coal like at Moorlands?

The consistency of the coal throughout the Moorlands deposit is very good.

We are anticipating the final product specification will remain largely unchanged with a high yield producing a 10.4% ash product with an energy content of 6077 kilocalories gross calorific value. It is expected the average sulphur levels will decrease as evidenced by a reduction in average raw coal sulphur levels. Positively for the coal, the HGI [Hardgrove Grindability Index] and ash fusion properties are very good.

As part of our forthcoming feasibility study work, Cuesta will investigate the economics of producing a higher-energy product.

The proposed South Pit is looking promising. What are the stripping ratios you are looking at for this?

As part of the definitive feasibility study we are investigating the best mine design in order to commence mining in the area with the lowest stripping ratio to maximise early returns. The scoping study that was completed indicated a stripping ratio of 3.2:1 in this area.

You have a Chinese cornerstone investor that has stuck with you despite the industry downturn.

How do you maintain the loyalty of such an important investor?

Cuesta is fortunate to have had the ongoing support of Longluck Investments – a wholly owned subsidiary of Beijing Guoli. They have invested a total of $32m in the company.

Typically, cornerstone investors have a long-term outlook on their investments and recognise the underlying intrinsic value of projects even when the industry is experiencing a downturn.

More recently, Hanford Holdings Limited became the second-largest shareholder of Cuesta, which was another very positive endorsement for the company.

What do you see as the immediate future of the Moorlands project? More exploration drilling?

Cuesta is focused on a couple of different areas over the coming months. These are primarily the finalisation of our maiden reserves for Moorlands and the commencement of our definitive feasibility study.

During the year we will also be conducting some further field activities, which we will outline to our shareholders in the near future.

Where will the company get the funds to conduct the development of Moorlands?

Cuesta has commenced discussions with a variety of banks regarding project finance for the construction of the project. These discussions will take place in the lead up to finishing the feasibility study in order for the company to make a final investment decision.

When the exploration is all done, what will be the anticipated production for the mine?

We will produce 1.9Mtpa of ROM and 1.7 of product coal from Moorlands South Pit.

How will you get the coal to the port?

As Blair Athol and the associated infrastructure is only about, 14km from Moorlands, we have a few options available to us.

Cuesta is planning to truck the product via an internal haul road approximately 11km to a train load out facility, rail loop and spur, for transport to Dalrymple Bay Coal Terminal for export.

Do you spend a lot of time onsite in Queensland?

I like Queensland a lot, particularly the weather and the people. Cuesta has an office in Taringa where our operational team is based. I particularly enjoy going to site when we are drilling.

What’s the mood like these days on the coalfields? Picking up?

Recently the mood has been fairly dim and unfortunately a lot of people have lost jobs. Many businesses servicing the coal industry are struggling. As a whole, the Australian coal producers have been trying with some success to improve productivity to lower their unit costs. In my opinion, the Australian coal industry still has a big future.

What are your goals for Cuesta Coal?

My goal for Cuesta is to establish the company as a leading Queensland coal producer through the successful development of the Moorlands project. This will allow the company to realise the true value of the Moorlands asset and generate positive cash flows for our shareholders in the shortest timeframe possible.