PERTH (miningweekly.com) – Coal developer Allegiance Coal has once again reduced the projected start-up capital for its New Elk coal mine, in Colorado.

The ASX-listed miner on Wednesday said that a review of the mine plan by independent engineers Stantec has reduced the startup capital estimate from $40-million to $24-million.

The $40-million startup capital in itself was a reduction of the previous estimate of $56-million quoted in a maiden feasibility study, released in November last year.

The updated feasibility study’s mine plan was based on the development of a startup mine which would allow Allegiance more time to prudently assess the mine’s production ramp-up options, and would see the production of 23-million tonnes of saleable coal at a rate of 1.4-million tonnes a year, for a period of 15 years.

The startup mine plan required four underground coal production units, with the first three units starting within four months from the start of production, and the fourth within year four of operations.

In an effort to reduce the startup capital further, Allegiance has now rescheduled the mine plan and equipment, with two of the production units being operational within seven months from the start of operations, the third within ten months, and the fourth by the fourth year of operations.

Allegiance noted that while the slow startup mine plan delayed the startup capital by six months, the company could delay it further if it was necessary to do so, or could bring the capital expenditure forward, if the capital was available and if market conditions demanded.

“The board continually challenges itself to assess the best way in which to develop New Elk and to create as many options as are available given the availability of capital and the state of the steel, and steelmaking coal industries,” said Allegiance chairperson and MD Mark Gray.

“This revision to the startup mine plan, what we call the slow startup mine plan, offers Allegiance the ability to commence production with a significantly lower startup capital demand, if Allegiance is required, or feels it would be prudent at the time to do so.

“Allegiance continues to work with its potential equity and debt providers in sourcing the capital needs of New Elk, and remains confident of doing so given the potential low cost of New Elk to deliver coal to the seaborne market, coupled with what we believe will be a major loss of coking coal supply this year as high cost producers are forced out of the market.”