Vista Bankable Feasibility Study provides blueprint for the largest export thermal coal mine in North America
Highlights:
-- Annual marketable coal production capacity of 11.2Mtpa, after
ramp-up to full production, and a 30 year mine life on Vista at
a 9.2:1 clean coal strip ratio
-- Mine gate cash costs of C$27.3/t in the initial 10 years of
production and C$34.4/t over life of mine
-- Average Free-on-Board cash costs of C$61.0/t in the initial 10
years of production and C$68.1/t over life of mine
-- Total development costs of C$1,234 million required to reach
full production capacity of 11.2Mtpa
-- Utilizing free cash flow generated in the first phase of
development reduces estimated peak funding to reach full
capacity to C$894 million
-- Projected initial 10 year average annual operating cashflows
(EBITDA) of C$421Mpa and LOM average annual operating cashflows
of C$587Mpa
-- After-tax NPV of C$2.1 billion on Vista (at an 8% discount
rate) using Wood Mackenzie long term thermal export coal price
forecast
CALGARY, Jan. 30, 2012 /CNW/ - Coalspur Mines Limited ('Coalspur' or 'Company')
is pleased to announce the completion of a Bankable Feasibility Study(1) ('BFS') on the Company's flagship Vista Coal Project ('Vista'). The BFS follows a Pre-Feasibility Study ('PFS') which was completed in December 2010 and is the final major technical study that will be completed prior to the start of construction on Vista. The BFS was undertaken by Snowden Mining Industry Consultants Inc. and a number of internationally recognized coal industry engineering firms. The BFS defined a 30 year mine life producing approximately 11.2 million tonnes per annum ('Mtpa') of marketable clean coal from the processing of approximately 20.4Mtpa of run of mine ('ROM') coal on Vista, after ramp-up to full production.Commenting on the completion of the BFS, Managing Director and CEO, Gene Wusaty said 'The positive results of the BFS confirm Vista's potential as a first class export thermal coal project. The BFS includes a very detailed evaluation of Vista's productive potential and a comprehensive assessment of the capital costs required to develop the mine. The growing demand for thermal coal in the Asian Pacific economies continues to support the underlying fundamentals required to proceed with the development of Vista. Vista is expected to also generate significant value for the Hinton region through job creation and infrastructure expansion. Following completion of the BFS Coalspur will now proceed to submit the final first phase regulatory applications and commence detailed engineering on Vista. These initiatives are expected to be completed in early 2013 with construction to immediately follow.'
Mr Wusaty further stated 'With the completion of the BFS, the secured port allocation at Ridley Terminals and an MOU with CN Rail, Coalspur has been elevated into the top-tier of global export thermal coal developers. With an existing, high-quality logistics supply chain in place and compelling project economics, Coalspur is expected to become a strategic supplier of export thermal coal in the next few years which will enable our shareholders to capitalize on strong coal market dynamics.'
With the completion of the BFS, Coalspur will now focus on completing several initiatives that are expected to enhance the economics of the Vista Project and ensure that the timeline to production remains on schedule. These include evaluating the utilization of contractors for pre-strip and initial years of mining to reduce capital costs on mobile equipment on Vista, progressing project financing discussions with potential off-take partners, initiating detailed engineering on the Vista mine design, and submitting the final regulatory applications required to begin construction.
A summary of the key results from the BFS are summarized below in Table 1. The results are split into the first three decades of operations and include production metrics, operating costs and operating cash flows.
_____________________________________________________________________
|Table 1: Bankable Feasibility Study Production and Operating Cost |
|Summary |
|_____________________________________________________________________|
|Mine Schedule |Years 1 - 10|Years 1 - 20|Years 1 - 30|
|______________________________|____________|____________|____________|
|Production Summary |
|_____________________________________________________________________|
|ROM Coal Production | | | |
|______________________________|____________|____________|____________|
|Val d'Or and McPherson Seams | 143.8 | 316.7 | 474.5 |
|(Mt) | | | |
|______________________________|____________|____________|____________|
|McLeod Seam (Mt) | 24.7 | 55.8 | 90.3 |
|______________________________|____________|____________|____________|
|Total ROM Coal Production (Mt)| 168.5 | 372.6 | 564.8 |
|______________________________|____________|____________|____________|
| |
|_____________________________________________________________________|
|Clean Coal Production | | | |
|______________________________|____________|____________|____________|
|Val d'Or and McPherson Seams | 82.6 | 182.8 | 274.0 |
|(Mt) | | | |
|______________________________|____________|____________|____________|
|McLeod Seam (Mt) | 10.7 | 24.0 | 38.4 |
|______________________________|____________|____________|____________|
|Total Clean Coal Production | 93.3 | 206.7 | 312.3 |
|(Mt) | | | |
|______________________________|____________|____________|____________|
| |
|_____________________________________________________________________|
|Strip Ratio | | | |
|______________________________|____________|____________|____________|
|ROM Strip Ratio | 3.9:1 | 4.9:1 | 5.1:1 |
|______________________________|____________|____________|____________|
|Clean Coal Strip Ratio | 7.0:1 | 8.9:1 | 9.2:1 |
|______________________________|____________|____________|____________|
| |
|_____________________________________________________________________|
|Operating Cost Summary |
|_____________________________________________________________________|
|Mine Gate Cost (C$/t) | 27.34 | 32.24 | 34.37 |
|______________________________|____________|____________|____________|
|Rail & Port Costs (C$/t) | 33.69 | 33.69 | 33.69 |
|______________________________|____________|____________|____________|
|Total Average Cash Operating | 61.03 | 65.93 | 68.06 |
|Costs (C$/t) | | | |
|______________________________|____________|____________|____________|
| |
|_____________________________________________________________________|
|Average Annual Operating Cash | 420.7 | 537.2 | 587.4 |
|Flows (C$M) | | | |
|______________________________|____________|____________|____________|
(1)A Bankable Feasibility Study is a comprehensive analysis of a project's economics (+/- 15% precision) and is used by the banking industry for financing purposes.
Bankable Feasibility Study Key Results
Annual marketable coal production at full capacity of 11.2Mtpa and a 30 year mine life
-- Annual marketable coal production, at full capacity, on Vista
increased by 24% from the PFS to 11.2Mtpa
-- The production increase is a result of an enhanced mine plan,
improved clean coal yield and optimized infrastructure design
-- The production forecast assumes the process plant will run at
an average of 6,800 plant operating hours or at 78% net
effective utilization over the life of mine
Proven and Probable Marketable Coal Reserve of 313Mt
-- Engineering work completed as part of the BFS defined a Proven
and Probable Marketable Coal Reserve of 313Mt from a
Recoverable Coal Reserve of 566Mt
-- The increase in Coal Reserves from the PFS is attributable to a
larger pit limit, clean coal yield improvement and a refined
mining and coal recovery plan
-- The BFS mine schedule results in an initial 10 year clean coal
strip ratio of 7.0:1 and LOM clean coal strip ratio of 9.2:1
________________________________________________________________
|Table 2: JORC / NI 43-101 Compliant Coal Reserves |
|________________________________________________________________|
| |Recoverable Coal Reserve| Marketable CoalReserve |
| |________________________|________________________|
| | | |Proven &| | |Proven &|
| |Proven|Probable|Probable|Proven|Probable|Probable|
|Coal Seam | (Mt)| (Mt)| (Mt)| (Mt)| (Mt)| (Mt)|
|______________|______|________|________|______|________|________|
|Val d'Or and | 429.3| 45.9| 475.2| 248.5| 26.5| 275.0|
|McPherson | | | | | | |
|______________|______|________|________|______|________|________|
|McLeod | 74.4| 16.0| 90.3| 31.5| 6.9| 38.4|
|______________|______|________|________|______|________|________|
|Coalspur Total| 503.7| 61.8| 565.5| 280.0| 33.3| 313.4|
|Reserves | | | | | | |
|______________|______|________|________|______|________|________|
Note: Coal Reserve estimates effective December 13, 2011
Coal Quality
-- Additional coal quality analysis was completed as part of the
BFS. This resulted in a substantial increase in the overall
clean coal yield to 55%, up from the previous estimate of 50%
as outlined in the PFS
-- The coal quality analysis included further testwork on the
McLeod seam and confirmed its suitability for export thermal
markets - this seam was previously thought suitable only for
domestic market
-- The coal quality analysis was thorough and supervised by a
leading industry specialist. Testwork included a three tonne
bulk sample, over 1,200 raw coal data points encompassing all
regional areas in Vista and washability testing, clean coal
analysis and attrition testing
___________________________________________________________________
|Table 3: Life of Mine Clean Coal Yield Summary |
|___________________________________________________________________|
|Seam Clean Coal Yield |Bankable Feasibility|Pre-Feasibility Study|
| | Study | |
|________________________|____________________|_____________________|
|Val d'Or and McPherson | 57.7% | 53.3% |
|Combined | | |
|________________________|____________________|_____________________|
|McLeod | 42.5% | 33.8% |
|________________________|____________________|_____________________|
|All Seams Combined | 55.3% | 49.8% |
|________________________|____________________|_____________________|
|Clean Coal Product Split| | |
|________________________|____________________|_____________________|
|Val d'Or and McPherson | 87.7% | 87.9% |
|Combined | | |
|________________________|____________________|_____________________|
|McLeod | 12.3% | 12.1% |
|________________________|____________________|_____________________|
Competitive Economics
-- Vista has the potential to achieve mine gate cash costs in the
initial 10 years of production of C$27.3/t and LOM costs of
C$34.4/t
-- Free-on-board ('FOB') cash costs of C$61.0/t in the initial 10
years of production and C$68.1/t over LOM
-- Projected first phase development costs of C$864 million and an
incremental C$370 million to reach full capacity of 11.2Mtpa in
the second phase
-- Utilizing free cash flow generated in the first phase of
development reduces the estimated peak funding to reach full
capacity to C$894 million
-- Incorporating forecast coal prices from Wood Mackenzie and a
Canadian dollar to US dollar exchange rate of 0.94 resulted in
an after-tax net present value ('NPV') of C$2,115 million
-- Projected initial 10 year average annual operating cashflows
(EBITDA) of C$421 million per annum ('Mpa') and LOM average
annual operating cashflows of C$587Mpa
Rail & Port
-- Coalspur has progressed the transportation logistics required
to export its high quality thermal coal to the Asian Pacific
Rim countries, namely China, Japan and Korea
-- Coalspur secured a landmark throughput agreement with Ridley
Terminals Inc. ('Ridley Terminals') for up to 8.5Mpta of port
allocation for up to 21 years
-- The Company has executed a memorandum of understanding
('MOU')withCanadian National Railway ('CN Rail') under which
they will develop a high-quality logistics supply chain from
Vista to deep water ports on Canada's west coast, including
Ridley Terminals
-- Coalspur will work to secure additional port capacity and
negotiate a definitive transportation agreement with CN Rail
over the coming year
Development Plan
-- The development of the mine is planned in two phases to enable
the Company to utilize the mine permit it received in May 2011
which covers the eastern half of Vista
-- This phased approach enables Coalspur to improve development
timelines and reduce the upfront capital required before
achieving significant operating cashflows
-- The first phase of Vista is planned to produce 5.0Mtpa with
first production scheduled for early 2015
-- Development of the first phase will include infrastructure
components which will be capable of handling the additional
production volumes from the second phase
-- The second phase is scheduled to begin construction in 2015 and
reach full capacity of 11.2Mtpa of marketable coal production
in 2018
The full version of this announcement is available on the Company's website at www.coalspur.com and SEDAR at sedar.com.
Regulatory Disclosures
For further information regarding the Vista Coal Project and Vista South Coal Project, including a description of Coalspur's quality assurance program, quality control measures, the geology, samples collected and testing procedures in respect of the projects, please refer to the technical report on the Vista Coal Project titled 'Coalspur Mines Limited: Feasibility Study of the Vista Coal Project, Hinton, Alberta' dated January 26, 2012 and the technical report on the Vista South Project titled 'Resource Estimate for the Vista South Coal Property' dated December 15, 2010, which are compliant with National Instrument 43-101 - 'Standards of Disclosure for Mineral Projects' ('NI 43-101') and are available for review on SEDAR at sedar.com.
Competent Person / Qualified Person Statements
The information in this news release that relates to Coal Resources on the Vista Coal Project, mining engineering, Recoverable Coal Reserves, mining capital costs and mining operating costs is based on information compiled by Mr. Jim McQuaid, who is a Member of the Association of Professional Engineers, Geologists and Geophysicists of Alberta. Mr. McQuaid is a full-time employee of Marston Canada Ltd., who are consultants to Coalspur. Mr. McQuaid has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as a 'Competent Person' as defined in the 2004 Edition of the 'Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves' ('JORC Code'), and a 'Qualified Person' under NI 43-101. Mr. McQuaid has approved and consents to the inclusion of such information in this news release in the form and context in which it appears.
The information in this news release that relates to coal quality and process yield estimates to derive Marketable Coal Reserves is based on information compiled by Mr. Robert Leach, who is a Member of AusIMM Mr. Leach is a full-time employee of Bob Leach Pty Ltd, and is a consultant to Coalspur. Mr. Leach has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a 'Competent Person' as defined in the 2004 Edition of the JORC Code, and a 'Qualified Person' under NI 43-101. Mr. Leach consents to the inclusion of such information in this news release in the form and context in which it appears.
The information in this news release that relates to operating costs and capital costs related to coal crushing, coal handling, and infrastructure is based on information compiled by Mr. Mark Malacek, who is a Member of the Association of Professional Engineers and Geoscientists of British Columbia. Mr. Malacek is a full-time employee of CWA Engineers Inc., who are consultants to Coalspur. Mr. Malacek has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as a 'Competent Person' as defined in the 2004 Edition of the JORC Code, and a 'Qualified Person' under NI 43-101. Mr. Malacek consents to the inclusion of such information in this news release in the form and context in which it appears.
The information in this news release that relates to economic financial analysis is based on information compiled by Mr. Paul Franklin, who is a Member of the Association of Professional Engineers and Geoscientists of Saskatchewan. Mr. Franklin is a full-time employee of Snowden Mining Industry Consultants Inc., who are consultants to Coalspur. Mr. Franklin has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as a 'Competent Person' as defined in the 2004 Edition of the JORC Code, and a 'Qualified Person' under NI 43-101. Mr. Franklin has approved and consents to the inclusion of such information in this news release in the form and context in which it appears.
The information in this news release that relates to coal crushing, handling, processing and thermal drying is based on information compiled by Mr. Gordon Mudryk, who is a Member of the Association of Professional Engineers, Geologists and Geophysicists of Alberta. Mr. Mudryk is a full-time employee of Coalspur. Mr. Mudryk has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as a 'Competent Person' as defined in the 2004 Edition of the JORC Code, and a 'Qualified Person' under NI 43-101. Mr. Mudryk has approved and consents to the inclusion of such information in this news release in the form and context in which it appears.
The information in this news release that relates to Coal Resources on Vista South is based on information compiled by Mr. John Innis, who is a Member of the Association of Professional Engineers, Geologists and Geophysicists of Alberta. Mr. Innis is a full-time employee of Coalspur. Mr. Innis has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity he is undertaking to qualify as a 'Competent Person' as defined in the 2004 Edition of the JORC Code, and a 'Qualified Person' under NI 43-101. Mr. Innis has approved and consents to the inclusion of such information in this news release in the form and context in which it appears.
All other scientific and technical information in this news release is based on information compiled by Mr. Eugene Wusaty, who is a Member of the Association of Professional Engineers and Geoscientists of Alberta. Mr. Wusaty is a full-time employee of Coalspur. Mr. Wusaty has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a 'Competent Person' as defined in the JORC Code, and a 'Qualified Person' under NI 43-101. Mr. Wusaty has approved and consents to the inclusion of such information in this news release in the form and context in which it appears.
Forward Looking Statements
This news release contains 'forward-looking information' that is based on the Company's expectations, estimates and projections as of the date on which the statements were made. This forward-looking information includes, among other things, statements with respect to the development of Vista, the Company's Pre-Feasibility Study and Bankable Feasibility Study, the mine plan, drilling programs, time lines and completion dates, permits and approvals, business strategy, plans, development, objectives, performance, outlook, growth, cash flow, projections, targets and expectations, mineral reserves and resources, studies, results of exploration and related expenses. Generally, this forward-looking information can be identified by the use of forward-looking terminology such as 'will', 'expect', 'potential', 'outlook', 'anticipate', 'project', 'target', 'likely', 'believe', 'estimate', 'intend', 'may', 'would', 'could', 'should', 'scheduled', 'plan', 'forecast', 'evolve' or variations of such terms and similar expressions. Persons reading this news release are cautioned that such statements are only predictions, and that the Company's actual future results or performance may be materially different.
Forward-looking information is subject to known and unknown risks, uncertainties and other factors that may cause the Company's actual results, level of activity, performance or achievements to be materially different from those expressed or implied by such forward-looking information. Such factors include, without limitation, inherent uncertainties and risks associated with mineral exploration; uncertainties related to the availability of future financing necessary to undertake activities on the Company's properties; uncertainties related to general economic conditions; uncertainties related to global financial conditions; risks related to the integration of businesses and assets acquired by the Company; risks associated with the Company having no history of earnings or production revenue; uncertainties related to the possible recalculation of, or reduction in, the Company's mineral reserves and resources; uncertainties related to the outcome of studies to be undertaken by the Company; uncertainties relating to fluctuations in coal price; the risk that the Company's title to its properties could be challenged; risks related to the Company's ability to attract and retain qualified personnel; uncertainties related to the requirement for ministerial approval for a change of control of the Company; risks relating to consultation with the public and aboriginal groups; uncertainties related to the competitiveness of the mineral resource industry; risks associated with the Company being subject to government regulation, including changes in regulation; risks associated with the Company being subject to environmental laws and regulations, including a change in regulation; risks associated with the Company's need for governmental licenses, permits and approvals; uninsured risks and hazards; risks associated with fluctuations in foreign exchange rates; risks related to default by joint venture parties, contractors and agents; inherent risks associated with litigation; risks associated with potential conflicts of interest; risks related to effecting service of process on directors resident in foreign countries; uncertainties related to the Company's limited operating history; risks related to the Company's lack of a dividend history; risks relating to short term investments; and uncertainties related to fluctuations in the Company's share price. Although the Company has attempted to identify important factors that could cause actual actions, events or results to differ materially from those described in forward looking statements, there may be other factors that cause actions, events or results not to be as anticipated, estimated or intended.
In making the forward-looking statements the Company has applied several material assumptions which may prove to be incorrect, including, but not limited to, (1) that all required third party approvals will be obtained for the development, construction and production of its properties, (2) there being no significant disruptions affecting operations, whether due to labour disruptions, supply disruptions, power disruptions, damage to equipment or otherwise; (3) permitting, development and expansion proceeding on a basis consistent with the Company's current expectations; (4) currency exchange rates being approximately consistent with current levels; (5) certain price assumptions for coal; (6) production forecasts meeting expectations; (7) the accuracy of the Company's current mineral resource and reserve estimates; (8) labour and materials costs increasing on a basis consistent with the Company's current expectations; (9) that any additional required financing will be available on reasonable terms; and (10) assumptions made and judgments used in engineering and geological interpretation.
There can be no assurance that forward looking statements will prove to be accurate, as actual results and future events could differ materially from those anticipated in such statements. Accordingly, readers should not place undue reliance on forward looking statements.
The Company disclaims any intent or obligation to update or revise any forward-looking statements whether as a result of new information, estimates or options, future events or results or otherwise, unless required to do so by law.
Coalspur Mines Limited
CONTACT: Gene Wusaty
Managing Director and CEO
Telephone: +1 403 975 7901