PERTH (miningweekly.com) – An updated scoping study into the Elan hard coking coal project, in Alberta, Canada, has increased the mine life by six years, while reducing operating costs by 6%.
ASX-listed Atrum Coal said the updated scoping study incorporated the Isolation South resource upgrade into an enlarged and enhanced mine schedule, which also displaced all Elan South mining to drive project simplification, permit efficiency and development fast-tracking.
The updated scoping study also included refined capital cost estimates, while other key parameters have remained unchanged.
The updated scoping study has increased the expected mine life of the Elan project from the 15 years considered in the April 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’s post-tax net present value has increased from $860-million to $1.39-billion, while the internal rate of return has also increased from 25% to 28.8%, and the projected net cash flow from $2.61-billion to $4.58-billion.
Meanwhile, pre-production capital costs for the project have also increased by some $90-million, from $683-million to $773-million, while cash operating costs have declined from $81/t to $75/t.
“The updated scoping study is further evidence of the sheer quality and scale of the Elan project. We now have a 20-year operating life, at the world class scale of six-million tonnes a year hard coking coal, from solely Isolation South,” said MD and CEO Andy Caruso.
“At the same time, we have substantially lowered the forecast life-of-mine strip ratio and operating cost estimate, with the greatest benefit being delivered in the early years. These dynamics are what has driven a post-tax net present value for the Elan project that is now almost $1.4-billion, with an internal rate of return approaching 30%. These economics are quite simply outstanding for a project that is expected to produce tier 1 hard coking coal at that scale for that initial operating life.”
Caruso said that the company was now working on a prefeasibility study (PFS) due for mid-2021, providing a more detailed pathway for the future development of the Elan project.
The declaration of a maiden ore reserve is also expected along with the PFS.