Jameson Resources
Jameson Resources has entered into an option agreement to acquire the Basin Thermal Coal Mine (“Basin”) located in British Columbia, Canada. Basin has a large resource base of 124 million tonnes of raw coal with significant exploration upside. The Company is in the final stages of a feasibility study to recommission the existing mine at an expanded production rate between 500,000 and 700,000 tonnes per annum. Feasibility will be completed in the March quarter of 2010 and pending a decision to mine, production could commence by late 2010. Preliminary estimates support a cash operating margin of approximately $US20 per tonne based on 2010 futures contract pricing of thermal coal.
Jameson Resources targets Feasibility Study completion for Basin Coal mine in 1Q 2010
Emerging coal producer Jameson Resources (ASX: JAL) has expanded the mine case Feasibility Study at its Basin Thermal Coal Mine, located in British Columbia.
Norwest Corporation will now complete the feasibility study on an expanded mine case at an optimised level of production. This work is anticipated to be completed in 1Q 2010.
Initial start up production rate is planned at 500,000 tonnes per annum with potential ramp-up to a targeted 1 million tonnes per annum.
Managing director of Jameson John Holmes said preliminary estimates support a "robust cash operating margin of approximately US$20 per tonne" based on late 2010 futures contract pricing of thermal coal.
The anticipated start date of commercial production at Basin is late 2010.
Basin has a resource base of 123 million tonnes of raw coal with significant exploration upside.
The high volatile sub bituminous and bituminous thermal coal lends itself to export quality with specifications after washing including calorific value of 6080 kcal/kg (a.d.b.), 12% ash, and 0.5% sulphur.
Capital costs for new wash plant, rail load-out facility, and the other infrastructure required to recommission mine are estimated at a relatively modest US$20 million. Australian capital costs per tonne of production are often three times the cost of Basin, to bring into production.
Jameson said preliminary estimates of the capital required of US$8-12 million to refurbish the existing wash plant suggest that the construction of a more efficient larger capacity plant will deliver enhanced project economics.
With firming thermal coal prices of similar quality to Basin, futures contracts for delivery late 2010 are trading at approximately US$85/tonne and over US$100/tonne for delivery in 2012 (ICE Europe), markets are expecting a rise in coal prices going forward, provides greater confidence in cash margin.
This would see an operating cash margin of around US$20 per tonne for Basin coal.
With Chinese domestic prices approaching US$100/tonne, this is likely to underpin upward momentum on world prices.
John Holmes said discussions with potential domestic and international buyers of coal to be produced from Basin are continuing.
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