Northern Energy Corporation
Northern Energy Corporation (ASX: NEC) is an ASX-listed company with coal projects in Queensland and New South Wales, Australia. The Company has interests in a portfolio of coking and thermal coal projects being progressed towards development. These projects represent a diversified suite of geographically spread resource development opportunities involving various coal types and mining methods.
Northern Energy Corporation identifies 5.9mt coal reserves at Colton Mine
Northern Energy Corporation (ASX: NEC) has reported the delineation of 5.9 million tonnes (Mt) of Probable Reserves of Hard Coking Coal at its proposed Colton Mine, part of the Maryborough project in Queensland, and identified potential for further increase following the exploration programme.
Mine planning, coal quality, infrastructure design and costing has been progressed and the Colton Project design work is continuing. The exploration programme is about to commence, with the objective of making resource upgrades.
Keith Barker, managing director, said “the identification of Reserves at the Colton Mine Area represents an important milestone in the plans of the company to establish a 0.5 Mt per annum open cut mine at Colton."
“These reserves have been identified following mine engineering and evaluation over the coal resources identified in and around the planned Colton mine area. In addition to the Probable Reserve, the analysis has identified the potential to extend the Reserve area subject to upgrading previously announced Inferred Resources.”
In April this year NEC announced an 83 Mt resource at Maryborough – 9.5 Mt Indicated Resource and 73.5 Mt Inferred Resource. During the past three months the Indicated Resource has increased slightly to 9.8 Mt and the Probable Reserve of 5.9 Mt has been estimated from this Resource.
The mine engineering and evaluation work, conducted by both Runge and NEC, has demonstrated the potential to extend Reserves at the proposed Colton Mine in the short to medium term.
This in turn would offer the opportunity to either extend the mine life or increase the rate of production of the Colton Mine. These options will require additional mining lease area and would be subject to a separate approval application process to that currently under way.
“On the basis of our current evaluation work, which is ongoing, we are confident that following successful exploration planned to commence next month an extension of the Reserves at Colton will be possible”, Barker said.
“Increased Reserves will allow us to consider more options for Colton, including an increase in production rate to around 1 Mtpa, which could be achieved at very low incremental capital cost, but would be subject to a separate approval process.”
“We are confident that our planned exploration program will deliver upgraded Resources and further Reserves, both in the current Colton Mine Area and also on the eastern limb of the Maryborough syncline where potential for establishment of a future satellite mining area has been identified”, Barker said.
“While the Colton project has not progressed as quickly as previously anticipated the delineation of this initial Reserve is another important milestone for the Colton Mine and NEC”, Barker said.
“The output from these important studies has an impact on the inputs to the Environmental Management Plan, which has also been delayed as a result.”
“Nevertheless, with a value at current market prices of around A$1.5 Billion this initial Reserve at Colton continues to provide the company with the realistic objective of joining the ranks of hard coking coal producers within the next 2 years with a project that has the potential to increase in capacity at low incremental cost in a short timeframe”, said Barker.
“Project timelines are currently under review but our most recent estimates are that shipments are not expected to commence before the second half of 2012,” added Barker
On April 22, 2010, Northern Energy announced an agreement with Chinese steel maker Xinyang Iron & Steel Group Company Ltd (Xinyang) with the signing of a life of mine off take agreement for 65 per cent of project production commencing with the Colton Mine.
This off take agreement would deliver approximately $700M in sales revenue to NEC over 10 years at current coal prices at the initial planned production rate. Xinyang has also agreed to invest $23M in NEC.
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