GREENX (GRX): Pre-Feasibility Study Confirms LCP as One of the Lowest Cost Global Coal Suppliers Into Europe - raport 5
UNI - EN REPORT No5/2016
HIGHLIGHTS:
•Pre-Feasibility Study results confirm the technical viability and robust economics of the Lublin Coal Project to be developed as a large scale long life strategic coal supplier. The European industry continues to consume more than 300Mt of hard coal per annum with increasing concerns over energy security
•Average operating cash costs of only US$25 per tonne (steady state) position the Project as the lowest cost supplier of coal into Prairie’s key regional European target markets
•Average EBITDA margin (steady state) of US$348 million provides for high cash margins from the adoption of international best practice for the design and operation of the mine and coal processing
•Key PFS results for the Lublin Coal Project are summarised as follows:
oAnnual Saleable Coal Production (Steady State Average) 6.34 million tonnes per year
oTotal Operating Costs FOR Mine Gate (Steady State Ave) US$25 per saleable tonne
oAnnual EBITDA (Steady State Average) US$348 million
oInitial Mine Life from First Production (Ore Reserves Only) 24 years
oInitial Marketable Ore Reserve 139.1Mt
•In-situ coal quality provides flexibility to produce exceptionally low ash semi-soft coking coal and premium coals for the power generation sector, as well as a range of sized coal for households and industrial coals, with substantial netback pricing advantages due to the proximity of regional end users
•Access to well established regional rail and port infrastructure with underutilised bulk cargo capacity for low transportation costs within Poland, to regional European markets by rail, and to the seaborne export market through underutilised ports in the north of Poland
•Leveraging off existing infrastructure has resulted in total direct Capex of US$558 million plus contingencies, EPCM and owners costs of US$74 million. The Capex is comprised of US$136 million for coal processing and surface facilities, shaft sinking costs of US$233 million and other underground development costs of US$188 million
•Significant positive social and economic benefits for the Lublin region, including the potential to double foreign direct investment and create new jobs
•Potential for significant expansion of production beyond the proposed PFS marketable reserve, by inclusion of some 87Mt of inferred resource from the 391 seam, or inclusion from other new coal seams, which will be examined as part of upcoming technical studies to enhance the Project
•Prairie’s Polish and international management team with experience in developing, operating and financing world-scale coal projects, will now commence discussions with potential off-takers and EPC contractors as well as focus on Project permitting
Prairie Mining Limited (“Prairie” or “Company”) is pleased to announce the results of a Pre-Feasibility Study (“Study” or “PFS”) which has been prepared in accordance with the JORC Code (2012 Edition). The Study has been conducted on the Company’s Lublin Coal Project (“LCP” or “Project”) located in the low cost and proven Lublin Coal Basin in south eastern Poland.
Utilising the Project’s initial Marketable Ore Reserve Estimate of 139.1 million tonnes (“Mt”) of coal, the Project can support average steady state production of 8.0 million tonnes per annum (“Mtpa”) Run-of-Mine (“ROM”) coal, yielding an average of 6.34Mtpa of saleable clean coal. The LCP’s fundamentals are extremely encouraging with average operating cash costs (inclusive of SG&A and royalties) during steady state production of US$24.96/tonne of saleable coal Free On Rail at the Mine Gate (“FOR”), indicating that the LCP would be the lowest cost supplier of coal into Prairie’s key regional European target markets. The high margin LCP is expected to achieve average earnings before interest, taxes, depreciation, and amortization (“EBITDA”) of US$348 million per annum (steady state).
Table 1: Coal Price Sensitivity Analysis
Adjustment to Sales Forecasts -10% -5% Base Case +5% +10%
Annual EBITDA (Steady State) US$298m US$323m US$348m US$373m US$399m
The LCP is located in south eastern Poland in the Lublin Coal Basin, which is proven to be the lowest cost hard coal basin in Europe, and is well serviced by modern and highly efficient infrastructure, offering the potential for low capital intensity mine development. Mining services, construction personnel, contractors and equipment are expected to be supplied and/or built by a combination of Polish firms and international firms.
Prairie’s Chief Executive Officer, Mr Ben Stoikovich, said “The PFS has confirmed the potential to develop a world scale, multi-generational coal mine with strong cash flows. In fact, we expect that the Lublin Coal Project would be the lowest cost global supplier of coal into Prairie’s key regional European target markets.
We are in the enviable position of having a highly advanced project with very strong fundamentals, located in a proven world class coal basin. The Lublin Coal Project has the potential to become a significant new coal producer within the industrial heartland of Europe and offer a strategic supply of high quality coal to regional European markets, and for seaborne export. We expect this will become even more important given the ever increasing concern over the security of energy supply, particularly for Central Europe. We look forward to the Project providing a tremendous boost in local employment opportunities and benefits for the regional and national economy”.
Mr Mirosław Taras, a Prairie executive and former CEO of Lubelski Węgiel BOGDANKA (“Bogdanka”), further said: “The Lublin Coal Project is the first coal mining investment in Poland in line with international standards such as JORC or the Equator Principles. The new Jan Karski mine at the Lublin Coal Project will be the first, but hopefully not last in Poland to introduce advanced roof bolting technology for roadway primary support, which will lower costs, increase productivity and improve safety. I believe that the world-class Lublin Coal Project can contribute to Poland reclaiming its position as a reliable coal exporter in Europe and bring enhanced energy security to the region. I am strongly connected to the Lublin region as I have already built one mine in Lublin and seen the prosperity it bought to the community. I will now take even greater satisfaction in working on a similar project, except that this project will have the benefits of being more technologically advanced, thoroughly planned and run according to international best practice. I’m proud to see the Lublin Coal Project continue to receive strong support from the local community and government who recognise its potential to provide a tremendous boost in local employment opportunities in both the regional and national economy.”
To view the full PFS announcement, please refer to the Company’s website at www.pdz.com.au
For further information contact:
Ben Stoikovich Artur Kluczny
Chief Executive Officer Group Executive - Poland
+44 207 478 3900 +48 22 351 73 80 info@pdz.com.au
