PERTH (miningweekly.com) – ASX-listed junior Jameson Resources has reached an agreement with fellow listed coal miner Bathurst Resources to fund the development of the Crown Mountain coking coal project, in Canada.
Bathurst will provide an initial C$4-million investment into Jameson’s Canadian subsidiary NWP Coal Canada, to fund the 2018 summer exploration programme.
Once the exploration results have been reported, Bathurst would have the option to invest an additional C$7.5-million in NWP to sole-fund the bankable feasibility study (BFS), and the permitting required to construct a mine. Once the BFS is complete and the required permits have been granted, Bathurst would have the option to sole-fund the first C110-million of construction costs, in the form of cash.
Once Bathurst has invested the full C$121.5-million, the Crown Mountain project will become a 50:50 joint venture (JV) between Jameson and Bathurst.
Bathurst will be allowed to nominate one director to the NWP board on the execution of the agreement, and once a JV is established, will be able to appoint half of the NWP directors.
Bathurst told shareholders on Friday that the opportunity to invest in the Crown Mountain mine had definite alignment with the company’s current business, in terms of the ability to operate in a challenging mining environment. The company said that it also had the technical capabilities to successfully convert projects from feasibility through to production.
Bathurst manages five operating mines in New Zealand.
Furthermore, Bathurst said that the staged investment model provided the company with the opportunity to de-risk the project with specific milestones for incremental investment, as the project progressed towards a final investment decision.
Jameson has meanwhile told its shareholders that the Bathurst funding would provide adequate cash to meet the projected costs for pre-construction activities, exploration, permitting, design engineering and a BFS.
Should all Bathurst tranches be consummated, Jameson said that the anticipated C$110-million from Bathurst would represent the majority, if not the only cash component for construction.
The Crown Mountain project is expected to produce 1.7-million tonnes a year of coal over a mine life of 16 years. Free-on-board cash costs will average some $66/t during the first four years of operation, and will reach $75/t over the life-of-mine.
The project is expected to require a preproduction capital investment of $281-million.
Bathurst will now apply to the ASX to determine if any portion of the transaction required shareholder approval under the ASX listing rules.