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Tigers Realm Coal Ltd plans production this quarter with $23.3M raised

With $23.3 million funding recently secured in a successful rights issue, the company is targeting production for December, 2016.
Tigers Realm Coal Ltd plans production this quarter with $23.3M raised
Roman Kopin, Governor of CAO (left) and Peter Balka, TIG CEO (right), following signing of the Co-operation Agreement.

Tigers Realm Coal Ltd (ASX:TIG) has commenced the development of Project F Phase One at its Amaam Coking Coal Project located in eastern Russia.

With $23.3 million funding recently secured in a successful rights issue, the company is targeting production for December, 2016.

The company has been applying the funds raised towards completion of a 30 kilometre haulage road, mining equipment and site infrastructure construction works.

Following test work, two North Asian steel companies have already confirmed their technical acceptance of Project F semi hard coking coals subject to trial cargos.

Additionally, confirmation has been received from several other North Asian customers of their potential interest in our Phase One thermal and semi soft coal products.


Background

Two tenements, Amaam and Amaam North, together comprise the Amaam Coking Coal Project, located within 35 kilometres of the Bering Sea coast in Chukotka Autonomous Okrug, far eastern Russia.

Tigers Realm has 80% ownership of Amaam and has recently signed a Heads of Agreement which will see its 80% ownership of Amaam North increase to 100%.

In addition, the company owns 100% of the Beringovsky Port and Coal Terminal, located 35 kilometres to the north east of the Amaam North tenement.

Amaam and Amaam North have combined JORC compliant coal resources of 632 million tonnes with the majority of these resources being of coking coal quality.

Project F within Amaam North has 110.6 million tonnes of coal resources, 16.1 million tonnes of which have already been classified as Product (Marketable) Reserves under JORC.

Tigers Realm aims to commence coal mining late in the fourth quarter of 2016 at Project F: Phase One.


Project F: Phase One update

Phase One is a starter project ahead of an expansion to full Project F at 1+ million tonnes per annum.

The Phase One open pit targets near surface coal reserves located 37 kilometres from the company owned Beringovsky Port.

The capital investment for Phase One is estimated to be US$ 6.6 million expended in two periods and site operating costs are estimated at US$25 per tonne free on board (FOB).

The first stage of road works is 80% completed and is to be finished by November.

Infrastructure construction commenced in early October following the arrival of required construction materials and contractor teams to Beringovsky.

Planned 2016 procurement for Phase One is complete.

To date, work on mining operations has focussed on recruitment, detailed mine planning, and preparations for grade control drilling. The project’s key operational roles are now filled.

Work in the mine area is expected start in early November.

The successful completion of these works according to plan will see first coal mined and transported to the port stockpiles in December 2016.


Analysis

With $17.7 million in cash at the end of the September quarter and development of Project F Phase One underway, Tigers Realm is well positioned to make the transition into a coking coal producer.

This starter open pit project has good potential to generate free cash flow with low operating costs of US$25 per tonne FOB.

Recent spot selling prices ensure a good margin at US$65 per tonne FOB for thermal coal and US$110 per tonne FOB for semi soft coking coal from the nearby port.

Project F has the potential to be one of the world’s lowest cost coking coal producers.

Test work completed by North Asian steel companies confirming the technical acceptance of Project F semi hard coking coals subject to trial cargos further de-risks the project.

Shares in Tigers Realm are trading strongly, up 150% year to date, currently priced at $0.075.

News flow is expected with regard to further development updates at Project F Phase One and grade control, which is expected to commence within two weeks.

With a JORC compliant coal resources of 632 million tonnes within Amaam and Amaam North, Project F is just beginning for Tigers Realm.





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