Name of the Project
Buck Creek coal mine complex project.

Location
The Buck Creek mine complex is located in the Western Kentucky region of the Illinois basin, which is one of the most prolific coal-producing regions in the US.

Client
Paringa Resources.

Project Description
The coal mining complex includes the staged, modular development of the 2.8-million-tonne-a-year Poplar Grove and 3.8-million-tonne-a-year Cypress mines.

An expanded bankable feasibility study (BFS) completed on Poplar Grove in March has incorporated a second coal seam to the mine – the Western Kentucky No 11 (WK 11) coal seam – resulting in a 56% increase in mine production to 2.8-million tonnes a year. The original BFS, which included the Western Kentucky No 9 coal seam, considered a 1.8-million-tonne-a-year operation.

Access to the WK 9 seam will be through a low-cost boxcut excavation followed by three decline drifts excavated using continuous mining equipment.

Paringa will access the WK 11 seam from the northern limb of Poplar Grove’s mine plan by 2020 through an incline, excavated using continuous mining equipment.

In 2033, Paringa will access the WK 11 seam from the southern limb of Poplar Grove’s mine plan.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The combined net present value (NPV) of both mines, at an 8% discount rate, has been estimated at $655-million. On a standalone basis, the NPV of the projected cash flows from the initial Poplar Grove mine has been estimated at $310-million at an 8% discount rate, with an internal rate of return of 42%.

Value
The expanded BFS has estimated total capital expenditure (capex) at $44.7-million for the initial construction of Poplar Grove. Capital for construction of the WK 11 incline and vertical shafts is estimated at $15.8-million, which will be funded from Poplar Grove’s operating cash flow.

Capex at the Cypress mine has been estimated at $101.8-million.

Duration
Construction of the Poplar Grove mine started in August 2017. First coal is expected 12 months from the start of construction.

Latest Developments
Paringa Resources had delayed the first coal sales from its Poplar Grove operation by two weeks until the week of April 22.

The delay in coal sales is as a result of the decision to install the slope conveyor sooner than originally planned, as the run-of-mine (RoM) volumes being brought to the surface by underground mucking and transportation have been lower than expected, owing to a directive from the Mine Safety and Health Administration that has limited operations to one loader.

The slope conveyor being installed will have the capacity to transport up to 2 000 t/h of RoM material from the slope bottom, and will enable Paringa to further improve the planned ramp-up of production from Poplar Grove.

The company has indicated that although the first shipment of coal will be delayed, the establishment of the permanent ventilation system and operations using the mine slope conveyor will enable Paringa to start a typical underground room-and-pillar mining sequence, increasing mining advance rates and eliminating the haulage bottleneck currently limiting the mine’s production ramp-up.

The 2.8-million-tonne-a-year Poplar Grove thermal coal mine forms part of Paringa’s 16 100 ha Buck Creek complex, which also contains the 3.8-million-tonne-a-year Cypress mine, where construction is set to begin in 2019.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
The project remains on track.

Contact Details for Project Information
Paringa Resources, MD and CEO Grant Quasha, tel +61 8 9322 6322 or email gquasha@paringaresources.com.