Name and Location
Buck Creek No 2 coal project, Illinois, US.

Client
Paringa Resources.

Project Description
When Paringa originally acquired the coal leases comprising the Buck Creek mining complex in 2013, the only historical work that had been conducted on the property was on the No 1 Mine and, as a result, the No 1 Mine was the company’s initial focus.

Paringa has since acquired additional coal leases, undertaken expanded drilling programmes and prepared a geological model for the entire Buck Creek mining complex. This has led to the discovery of a section of coal to the south of the No 1 Mine area, with a shallow depth from surface that could be suitable for a simple, low-cost boxcut mine development to access the coal seam.

The discovery has prompted Paringa to undertake technical studies on a shallow section of coal, now called the No 2 Mine. Based on the exceptional results of these studies, Paringa will now develop the low capital expenditure (capex) No 2 Mine first, followed by the shovel-ready No 1 Mine, as part of a staged development strategy for building a new midtier, high-margin Illinois basin coal company.

Using the Buck Creek mine complex’s coal resource estimate of 224.8-million tons of coal, the project can support production of 2.3-million-tonnes-a-year of run-of-mine coal yielding an estimated 1.8-million tonnes a year of saleable clean coal at steady-state production over a 20-year mine life.

Proposed production from the mine will come exclusively from room-and-pillar mining methods.

The Buck Creek mine complex will ultimately become a strategic 5.6-million-tonne-a-year supplier of high-quality coal into the growing eastern US power market.

Net Present Value/Internal Rate of Return
Not stated.

Value
The project has an initial cost of $44.4-million.

Duration
Construction of Buck Creek No 2 is expected to take 12 months. Paringa hopes to start construction by the second quarter of 2017, with production targeted for mid-2018.

Latest Developments
With the permitting process now under way for the Buck Creek No 2 Mine, Paringa Resources expects construction of the mine to begin by the second quarter of 2017, with production due to get under way by mid-2018.

Paringa also continues to make progress with potential equity and debt financiers in the US.

The No 2 Mine required standard permits for mining, surface facilities, refuse storage and transportation, as well as Paringa securing these standard mine permits by the June quarter of next year.

The company has retained the services of consulting firm Associated Engineers for the permitting of the new coal mine.

Paringa has noted that almost 60% of No 2 Mine’s yearly production during the five-year sales agreement is now contracted with Louisville Gas & Electric and Kentucky Utilities.

It has also indicated that there is potential for significant reductions to the operating and capital costs at the Buck Creek mine complex, owing to continued reductions in labour, materials, supplies and fuel costs.

Further, there is potential for market conditions to improve following an unprecedented rationalisation of US coal production and further consolidation of supply into the Ohio River market.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
Paringa Resources, tel +61 8 9322 6322, fax +61 8 9322 6558 or email info@paringaresources.com.