PERTH (miningweekly.com) – A bankable feasibility study (BFS) into the Buck Creek No 1 mine, in the Illinois basin of the US, has confirmed the project’s economics, slightly increasing the expected earnings before interest, taxes, depreciation and amortisation (Ebitda).

A March prefeasibility study had estimated that the project could deliver 5.2-million tonnes a year run-of-mine product at steady-state production. At the time, it was estimated that the project would require an initial capital investment of $127-million to yield 3.8-million-tonnes-a-year of saleable coal, over a mine life of about 18 years.

However, owner Paringa Resources in November decreased the expected capital cost to $106-million, after receiving bids for all the major capital items for the construction and development of the Buck Creek No 1 mine.

The BFS has confirmed that the project would require a capital investment of $105-million and would deliver an Ebitda of $87-million, with operating costs expected to reach $29.37/t free-on-board.

“The BFS has produced an excellent result and has confirmed the Buck Creek No 1 mine to a compelling world-class mining project, generating strong Ebidta margins of over 35% despite the current depressed coal market in general,” said Paringa president and CEO David Gay.

“The 17% reduction in capital expenditure to only $105-million has also resonated well with US funding providers, and the project’s average annual Ebitda of $87-million a year, has resulted in a much shorter pay-back period of upfront funding.”

Gay noted that the BFS was based on actual contracted sales prices from the company’s binding agreements and a final bidding process with a large pool of contractors for all major capital items.

“With the required environmental permits already in place, the BFS was the final stage before we commence construction of the Buck Creek No 1 mine next year, once funding has been finalised.”

The construction period was expected to take about 19 months, and production start-up has been earmarked for the fourth quarter of 2017.