The feasibility study confirms that the Washpool Hard Coking Coal Project is technically and economically viable. The study proposes a 4Mtpa open cut mining operation over 25 years to produce 1.6Mtpa of hard coking coal. The capital cost is estimated at $320 million and operating costs are approximately $106 per tonne. The project has a net present value of $364 million and an internal rate of return of 30%. The study recommends progressing to a definitive feasibility study.
The feasibility study confirms that the Washpool Hard Coking Coal Project is technically and economically viable. The study proposes a 4Mtpa open cut mining operation over 25 years to produce 1.6Mtpa of hard coking coal. The capital cost is estimated at $320 million and operating costs are approximately $106 per tonne. The project has a net present value of $364 million and an internal rate of return of 30%. The study recommends progressing to a definitive feasibility study.
The feasibility study confirms that the Washpool Hard Coking Coal Project is technically and economically viable. The study proposes a 4Mtpa open cut mining operation over 25 years to produce 1.6Mtpa of hard coking coal. The capital cost is estimated at $320 million and operating costs are approximately $106 per tonne. The project has a net present value of $364 million and an internal rate of return of 30%. The study recommends progressing to a definitive feasibility study.
The feasibility study confirms that the Washpool Hard Coking Coal Project is technically and economically viable. The study proposes a 4Mtpa open cut mining operation over 25 years to produce 1.6Mtpa of hard coking coal. The capital cost is estimated at $320 million and operating costs are approximately $106 per tonne. The project has a net present value of $364 million and an internal rate of return of 30%. The study recommends progressing to a definitive feasibility study.
Perth: Level 2 Aquila Centre, 1 Preston Street, Como WA 6151 Telephone (61) 8 9423 0111Facsimile (61) 8 9423 0133 Brisbane: Level 11, 10 Market Street, Brisbane QLD 4000 Telephone (61) 7 3229 5630 Facsimile (61) 7 3229 5631 Thabazimbi: C/O Platina and Lood Avenue, Thabazimbi 0380, South Africa Telephone (27) 14 772 3337 Facsimile (27) 14 772 3337 Northern Cape: Stand 585 Opwag, Groblershoop, Northern Cape, South Africa Telephone (27) 798 816 459 Facsimile (27) 866 838 065 Indonesia: Level 2 Zone B Wisma Raharja, JI. TB Simatupang Kav 1, Jakarta 12560 Telephone (62) 21 7884 7214 Facsimile (62) 21 7884 7215 Washpool Har d Coki ng Coal Pr oj ect Feasi bi l i t y St udy Compl et ed
Highlights:
Project Feasibility Study confirms the technicaland economic feasibility of the
WashpoolHardCokingCoalProject. The Feasibility Study proposes a 4Mtpa open cut mining operation producing 1.6Mtpahardcokingcoalovera25yearlifeofmine. Capital expenditure is estimated at $320 million which includes provisions for EPCM($51million)andcontingency($42million). OperatingCostsofapproximately$106pertonneFOB(excludingroyalty). InvestmentevaluationofthemineindicatesNetPresentValueof$364million, withanInternalRateofReturnof30%. Cultural Heritage Investigation and Management Agreement for Project area executedwiththeendorsedIndigenousParty,theKangouluPeople. FinalTermsofReferencefortheEnvironmentalImpactStatementpublished. ResourceandReservesStatementswerereleasedinMay2010; o Measured,Indicated&InferredResourceof185.5Mt. o ProvedandProbableReservesof108.3Mt. ProjectprogressestoDefinitiveFeasibilityStudystage.
2 Aquila Resources Limited (ASX:AQA the Company or Aquila) is pleased to announce that Washpool Coal Pty Ltd, a wholly owned subsidiary of Aquila Resources Limited, has completed the Feasibility Study for the Washpool Hard Coking Coal Project, which confirms the technical and economic viability of the Project.
The Project is located in the Bowen Basin in Central Queensland, approximately 260km West of Rockhampton and 24km North West of Blackwater. It lies to the immediate West of the Curragh mining operation and to the East of the Ensham Mine. The Feasibility Study proposes an open cut operation mining 4Mtpa of run of mine (ROM) coal, to produce 1.6Mtpa of high rank hard coking coal over a mine life of 25 years, with the coal to be exported through the proposed Wiggins Island Coal Terminal in Gladstone.
This study commenced following completion of the initial concept stage in J une 2009. The work that has been completed, is based on exploration programs undertaken between J uly 2009 and February 2010, which included both drilling and coal quality coring work and the associated technical testing. In addition, a series of engineering studies have been undertaken to produce capital and operating cost estimates for the Project.
Subject to statutory approvals and completion of further technical studies, construction of the mine could commence in 2012 with first coal mined early in calendar 2013.
Washpool Hard Coking Coal Project Regional Plan
3 Capital Costs
The outcomes of the Feasibility Study, indicate that the Project can be developed for a capital cost of $320M, which includes provisions for EPCM and contingency costs.
Capital Summary Base Case Coal Handling Preparation Plant 53 Surface Infrastructure 136 Power 23 Pre-production 15 EPCM 51 Subtotal 278 Contingency 42 Total 320
Notes: The surface infrastructure costs include the establishment of all coal handling, coal preparation, site rail logistics requirements and buildings and roads for the mine. The base case assumes that the overburden is stripped using cast, doze and excavate methodology. The option of utilising a dragline from year two will be carried into the Definitive Feasibility Study for further evaluation and if implemented will impact on the capital and operating costs. The base case also considers two options for the rail loop location, which will be carried into the Definitive Feasibility Study for further evaluation. Both options would connect directly into the Blackwater system. Appropriate contingency allowances have been applied for this level of study of the Project.
Washpool Hard Coking Coal Mine Layout
4 Operating Costs
Results of the Study confirm that the mine can produce coal for approximately $106 per tonne (FOB operating cost, excluding royalties, over the first ten years) and the mine has a life of 25 years, although potential additional resource in the south east area of the mine where further drilling is planned, may allow for a mine life in excess of 25 years.
Operating Costs Cost per Prod t Mining and Processing Costs 87 Rail and Port Costs 19 Total 106
Investment Evaluation
The investment evaluation of the mine revealed a Net Present Value of $364million at a discount rate of 10%, and an Internal Rate of Return of 30%. Revenue assumptions were based on an independent marketing evaluation, where coal prices were discounted against the forward prediction for hard coking coal price, so that the long-term assumption used in the evaluation was a coal price of US$144/t. The long term exchange rate assumption of AU$1 =US$0.72 was based on ANZ forward predictions.
Technical and Engineering Studies
The Feasibility Study contains both technical reports (covering the technical requirements to mine the hard coking coal from the open cut mine) and engineering studies (covering surface infrastructure, coal handling and preparation, and logistics). In addition to the Washpool Coal team, work has been undertaken by consultants and contractors experienced in Bowen Basin operations and the development of capital and operating cost estimates for these types of projects. These capital and operating cost estimates have been used to develop the project valuation.
Area Service Provider Coal Handling Preparation Plant AusTagg Surface Infrastructure Sinclair Knight Merz Power Minecraft / Hill MIchael Mining Options Study Xenith Consulting Mining Reserves Statement Xenith Consulting Coal Quality David Hornsby Marketing Study MinAxis Environment Sinclair Knight Merz
Updated Resource and Reserves Statement
Work completed by the Company during the Feasibility Study phase, which was released in May 2010, resulted in the total resource identified increasing to 185.5Mt, as follows:
Measured Million Tonnes Mt Indicated Mt Total measured and indicated Mt Inferred Mt Total Measured Indicated & Inferred Mt 108.8 23.9 132.7 52.7 185.5
5
The initial Reserves Statement complied by Xenith Consulting Pty Ltd, which was released at the same time, shows Proved and Probable Reserves as set out in the table below, giving an overall mine life of up to 25years.
Proved ROM Coal (Kt) Probable ROM Coal (Kt) Total ROM Coal (Kt) Proved Marketable Coal (Kt) Probable Marketable Coal (Kt) Total Marketable Coal (Kt) 94,743 13,517 108,260 34,078 5,000 39,078
Exploration potential still exists in the balance of the Washpool and Mt Crocker Exploration leases surrounding the Project area.
Coal Quality
The Washpool product will be a hard coking coal with very strong coking properties and a higher than specification ash. Whilst the market acceptability of higher ash coking coal is growing, the marketing strategy for the Project will be to target end users with a view to developing blends with weaker low ash coking coals.
Parameter Unit Typical Total Moisture (ar) % 12 Ash % 15 Volatile Matter % 20.5 Total Sulphur % 0.56 Phosphorus % 0.036 CSN >9 Max. Fluidity (average) dd/min 1000 Coke Strength After Reaction (CSR) 63 Coke Reactivity Index (CRI) 26 Gray King Coke Type G9 Romax % 1.35 Total Vitrinite % 84
Regulatory Approvals
Milestones achieved within the Feasibility Study phase, include:
Lodgement of the Mining Lease application;
Commencing the Environmental Impact Statement, finalising the Terms of Reference, and conducting all the baseline studies; and
Executing a Cultural Heritage Investigation Management Agreement with the endorsed Indigenous Party, the Kangoulu People.
6 Project Logistics
Washpool Coal Pty Ltd is a foundation shareholder of WICET Holdings Pty Ltd which has the exclusive mandate from the Queensland Government to develop the Wiggins Island Coal Terminal in Gladstone. The Washpool Hard Coking Coal Project has qualified for Stage 1 of the terminal and the Company intends to continue its support for the WICET feasibility study through to the terminal achieving financial close.
In addition, the Company is negotiating for capacity for both above rail and below rail services.
Summary of Study Outcomes
The Feasibility Study confirms the status of the Washpool Hard Coking Coal Project area as a major coking coal resource and provides confirmation that this resource is economically recoverable with open cut mining methods.
The Study recommends progression to the Definitive Feasibility Study stage.
Tony Poli Executive Chairman
For further information regarding this announcement, please contact Tony Poli.
The information in this announcement that relates to the Resource Statement has been based on information compiled by Mr Rod Doyle, who is a full-time employee of Aquila Resources Limited. He is a qualified geologist (BSc Geology UOW 1978 and MappSc UNSW 1988) with some 30 years experience in coal geology, coal mining and resource evaluation. He is a member of the Australasian Institute of Mining and Metallurgy and qualifies as a Competent Person under the JORC Code. Mr Doyle holds shares in Aquila Resources Limited.
The Reserves Statement was prepared by Mr Ross Haupt who is a director of Xenith Consulting Pty Ltd. He holds a Bachelor Degree in Mining Engineering from the University of Queensland with over 25 years experience in the open cut coal mining industry and substantial experience in mining operations. Ross Haupt is a Member of the Australasian Institute of Mining and Metallurgy and as such qualifies as a Competent Person under the JORC Code.
Mr Doyle and Mr Haupt consent to the inclusion in the announcement of the matters based on their information in the form and context in which it appears.
