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 a binding agreement with Cline Mining Corporation to acquire 100% of the issued capital of New Elk Coal Company (NECC), which holds 100% of the New Elk Mine and in which Cline is the sole shareholder, in January 2020.

It was a condition precedent to completion that Allegiance raise sufficient capital to complete the acquisition and provide startup capital for the New Elk Mine as provided in the mine feasibility study.

In June 2020, Allegiance announced that Cline had agreed to waive the capital raising condition. This will enable Allegiance to proceed to completion and start the works required to return the mine to production using existing funding, and seek to undertake appropriate capital raisings as and when required, and when conditions are favourable.

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.

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 resulted in a reduction in startup capital, including working capital, from $56-million to $40-million.

In April 2020, Allegiance announced that the necessary startup capital had been further reduced to about $24-million.

Planned Start/End Date
Allegiance Coal hopes to return the mine to production in 2021.

Latest Developments
In the quarter ended June 30, 2020, Allegiance negotiated the removal of all conditions to close the acquisition of the New Elk hard coking coal mine.

It further raised an estimated A$8-million through a convertible note to start the refurbishment of mining equipment and rehabilitation of the New Elk mine.

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.