PERTH (miningweekly.com) – The shares of coal developer Atrum Coal plunged to a low on Friday after the company announced that it would pause the prefeasibility study for its Elan project, in Alberta, after the government of Alberta took a decision to reinstate the previously rescinded Coal Development Policy for Alberta.

The policy dictates the condition for coal leasing, exploration and development, and prohibits future coal exploration approvals on particular land types.

Atrum on Friday said that its proposed Elan project was located on land designated as Category 2 under the coal policy, referring to land not normally considered for openpit coal mining, unless appropriate environmental stewardship is applied.

Furthermore, the Minister of Energy has also issued a directive to the Alberta Energy Regulatory (AER) that no mountaintop removal would be permitted, and that all restrictions under the policy categories would apply, including all restrictions on surface mining in Category 2 lands, and that all future coal exploration approvals on Category 2 lands would be prohibited, pending widespread consultation on a new coal policy.

“We fully accept the Alberta government’s reinstatement decision. We also welcome a consultation process that is rigorous, inclusive and transparent," said Atrum MD and CEO Andrew Caruso.

“We believe such a process is precisely how all key stakeholders, including First Nations, ranchers, local communities, industry and other land users, can work towards a balanced, modern policy that makes Alberta a world leader in sustainable resource development.”

He said that the company was looking forward to the opportunity to present how modern, sustainable mining and land use practices would enable Alberta to unlock the valuable hard coking coal resource held at Elan, while protecting its environment and waterways.

“I believe it is critical to continue to emphasise that Elan is a hard coking coal, also known as metallurgical coal, project. Unlike thermal coal, for which there are many alternative energy sources, there is no viable substitute for hard coking coal in the production of high strength and hardness carbon steel via the blast furnace route.

“Steel is essential to modern life and socioeconomic development, including in the construction of many of the renewable energy technologies and infrastructure that form the basis of the world’s transition towards a carbon-neutral setting,” said Caruso.

Atrum is able to continue activities on the Elan project already approved under its coal exploration permit, however, the company has halted all significant site-based activities, including all drilling planned in 2021, with the exception of baseline environmental study work that is required to ensure the continuity and integrity of work done in previous years.

Atrum earlier this month announced that Argonaut Capital and Shaw and Partners had withdrawn from an underwriting agreement, inked in December of last year, for the exercise of all listed Atrum options. The agreement was terminated as a result of the Alberta government’s reinstatement of the coal policy

The agreement covered some 99.1-million shares, and represented around A$19.8-million in gross proceeds.  

Atrum on Friday told shareholders that the company had some A$4.9-million cash on hand on March 15, with zero debt, but noted that cost reduction measures were now being implemented to reflect the significantly lower levels of site activities expected in 2021.

An updated scoping study into the Elan project has increased the expected mine life of the Elan project from the 15 years considered in the previous scoping study, to 21 years, with total run-of-mine coal mined increasing from 126-million tonnes to 187-million tonnes.

Annual throughput rates have remained unchanged at 10-million tonnes a year, while total saleable hard coking coal product has increased from 76-million tonnes to 112-million tonnes.

The project is expected to require a capital investment of $773-million.

Shares in Atrum plunged 70% to 7.4c apiece.