Tigers Realm Coal (ASX:TIG) is moving closer to production, as it continues the development of Project F Phase One at its Amaam Coking Coal Project located in eastern Russia.
As of early December, the road from the port to the open pit; new infrastructure including the workshop, office and laboratory; and upgrades to the existing accommodation camp; are complete.
Site works are presently focused on the open pit area where a small waste pre-strip is being excavated ahead of coal mining.
Tigers Realm is expecting to be mining and transporting coal to the port before the end of December.
Amaam Coking Coal Project
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.
Project F: Phase One
Phase One is a starter project ahead of an expansion to full Project F at 1+ million tonnes per annum.
First coal sales are expected during 2017, ramping up to 600,000 tonnes per annum of unwashed thermal and coking coal by 2018.
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 company recently secured $23.3 million funding through a successful rights issue.
With pre-mining work at Project F Phase One underway, Tigers Realm is well positioned to make the transition into a coking coal producer.
The project is located only 37 kilometres by road to the company owned coal port with competitive delivery routes to Asian customers.
This starter open pit project has good potential to generate free cash flow with low operating costs of US$25 per tonne FOB.
With site operating costs of circa US$41 per tonne FOB for the overall Project F, Tigers Realm has the potential to be one of the world’s lowest cost coking coal producers.
Coal prices have spike in the December quarter of 2016 Chinese restrictions on supply, Australian supply disruptions and lower U.S. coking coal exports.
Shares in Tigers Realm have doubled year to date, currently priced at $0.06.
With JORC compliant coal resources of 632 million tonnes within Amaam and Amaam North, Project F is just the beginning for Tigers Realm.
Relatively low capital expenditure is required to grow the project to an interim 2+ million tonnes per annum production capacity with further expansion potential thereafter.