PERTH (miningweekly.com) – A scoping study into the Elan hard coking coal project, in Alberta, Canada, has demonstrated the project’s economics for ASX-listed Atrum Coal.

The scoping study considered development options for the Elan project, namely a 10-million-tonne-a-year run-of-mine (RoM) production and a 7.5-million-tonne-a-year RoM production base case.

Over both scenarios, Elan is expected to deliver 126-million tonnes of RoM coal, with a mine life expectancy of between 19 and 15 years.

The base-case production scenario would require a capital investment of $587-million, while the enlarged operation would require an investment of $683-million. The base case operation is estimated to have a net present value of $790-million and an internal rate of return of 26%, compared with the net present value of $860-million and an internal rate of return of 25% for the enlarged project.

“We are delighted with the outcomes for the Elan project scoping study. If the 2018 and 2019 field programmes highlighted the sheer scale of resource endowment across Elan, then the scoping study has demonstrated the world-class nature of Atrum’s planned hard coking coal mine development there,” said MD and CEO Max Wang.

“Perhaps most exciting is the strong potential for substantial upside to the physical and financial metrics presented in the scoping study. The current mine schedule exploits less than 43% of the existing resource tonnes at the large, shallow Isolation South deposit. The potential to extend operating life, deliver future expansion, reduce pre-production capital or lower strip ratios in early years is strong,” he added.

Some 108-million tonnes of RoM coal of in-pit inferred resource at Isolation South has been excluded from the scoping study mine schedule and production target, which offers Atrum substantial potential upside to the project economics, Wang said.

“Similarly, further resource growth potential remains latent. There are significant swathers of the Elan tenure that are under-explored. Mapped coal extents stretch far beyond existing resource envelopes. As we have consistently noted, Elan has the clear potential to host multiple, large Tier 1 hard coking coal operations.

“Already well established as a world-class coking coal production region through Teck’s established operations in the nearby Elk Valley, a further mine development such as Elan in the Crowsnest Coalfield is an exciting opportunity, especially as we are targeting some of the highest quality metallurgical coal in the global market.”

While the project was now poised to start prefeasibility work, Atrum said that the Covid-19 pandemic meant that full commencement of these activities would be paused, with work limited to predominantly desktop study activities for the time being.

“While we would like to be forging ahead with the 2020 field programme and full scope prefeasibility study activities immediately, we must respect the global social and operating environment stemming from the Covid-19 pandemic. The safety of our people and the communities in which they live, and we operate, is and will always be our number one priority. To that end, we plan to undertake only limited project activities until risk levels start to recede,” Wang said.