Modern Mining

ASX-listed Acacia Coal has announced that a Pre-Feasibility Study (PFS) has found that its flagship Riversdale Anthracite Colliery (RAC) project in South Africa will generate strong financial returns for shareholders.

The study shows that the project is estimated to cost just A$24 million to build on an outsourced operational model, with sustaining capital of A$7,85 million and is forecast to generate an average 438 000 tonnes of sales per annum for an initial eight-year mine life.

Based upon an average selling price of A$125,1/tonne FCA mine gate and an effective 6 % royalty rate, the project study demonstrates a cash margin after tax of A$34,40/t.

The PFS found that these financial parameters would result in an outstanding internal rate of return of 53 % and underpin a Net Present Value at a 10 % discount rate of A$73 million.

Acacia Managing Director Hugh Callaghan said the combination of the extremely high quality nature of the RAC coal and the declining inventory of metallurgical coal in South Africa was at the heart of the project’s strong outlook.

Metallurgical test work conducted as part of the PFS found the RAC coal was ideal for use in South Africa’s ferrochrome industry, which is struggling to source sufficient quantities of low phosphorus and low sulphur anthracite.

Callaghan said these factors were responsible for the strong price environment which, when coupled with RAC’s low costs, would enable the project to enjoy robust margins.

“The PFS shows that the RAC project ticks every box, ranging from a premium-quality product through to low costs and strong margins,” he said. “The project is ideally placed to capitalise on the strong supply-demand fundamentals in the South African premium metallurgical coal market. There is also encouraging potential to grow the mine life with further drilling of both the Gus and Alfred seams.”

The PFS, led by VBKom, examined all aspects of geology, mining, processing and supporting infrastructure at market prices for anthracite, to a nominal accuracy of ±15 %.

The trade-off and detailed optimisation studies delivered an optimal development scenario of an average 60 000 tonnes per month underground mining operation using conventional mining in a bord-and-pillar configuration. It is envisaged that three adits will be developed and six sections established in a phased ramp-up. The mining operation would be undertaken by a contractor with 70 % of the equipment fleet being provided by Acacia.

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Title: Editor
Name: Arthur Tassell
Email: mining@crown.co.za
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