Name of the Project
New Elk coking coal project.

Location
The project is located in south-east Colorado, in the US.

Project Owner/s
Allegiance Coal entered into binding agreements to acquire New Elk in January 2020, on condition it raises the startup capital required by July 14, 2020.

Project Description
Following the results of the New Elk feasibility study announced in November 2019, Allegiance has updated the study, simplifying the mine plan in the early years of production to reduce startup and sustaining capital.

The project’s total Joint Ore Reserves Committee-compliant coal resources of 267.6-million tonnes have remained the same, while saleable coal reserves have decreased from 45-million tonnes in the feasibility study to 23-million tonnes in the updated study.

Based on the updated coal reserves, the project’s mine life has decreased from 23 years to 15 years, and saleable coal production from two-million tonnes to 1.4-million tonnes.

Coal will be mined using continuous miners adopting the place change room-and-pillar method.

Rehabilitation and operating plans for the coal handling preparation plant  (CHPP) have remained unchanged under the updated study. The CHPP has a nameplate feed rate of 727 t/h.

Potential Job Creation
An estimated 210 job are expected to be created.

All-in Sustaining Costs/All-in Costs
Not stated.

Net Present Value/Internal Rate of Return
The project’s net present value has decreased from A$1.17-billion, at an 8% discount rate in the feasibility study, to A$560-million at an 8% discount rate in the updated study. The internal rate of return has decreased from 130% to 121%.

Capital Expenditure
The updated study has resulted in a reduction in startup capital, including working capital, from $56-million to $40-million.

Planned Start/End Date
Not stated.

Latest Developments
Allegiance Coal has finalised a sale and marketing agreement with M Resources Trading over the coal produced at its New Elk mine.

The agreement provides for an exclusive global sales and marketing arrangement spanning five years, with M Resources’ marketing fees to be based on a percentage rate of the free-on-board coal sales price, multiplied by the tonnes of coal sold.

M Resources will provide up to $15-million in offtake financing, at an agreed percentage above its cost of funds for doing so, and will pay Allegiance its FoB port price for the first coal, when it is placed on the ground at the port of departure, and export up to a maximum amount of $15-million.

Allegiance has noted that offtake financing has eliminated the credit and payment risk for the company, consequently enabling Allegiance to receive funds up to two months in advance.

Key Contracts and Suppliers
Stantec (updated study) and Performance Industries (CHPP review).

Contact Details for Project Information
Allegiance Coal, tel +61 2 9233 5579 or email info@allegiancecoal.com.au.