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Montem Resources moves forward with plan to become coking coal supplier to global steel industry

Snapshot

The junior has targeted a fast mining restart at its Tent Mountain Mine in Canada’s premier coal mining region in Crowsnest Pass with first coal shipments planned for 2022.

Montem Resources Ltd - Montem Resources moves forward on plan to become a coking coal supplier to the global steel industry

Quick facts: Montem Resources Ltd

Price: 0.24 AUD

ASX:MR1
Market: ASX
Market Cap: $48.71 m
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Montem Resources Ltd (ASX:MR1) is progressing plans to become a coking coal supplier to the global steel industry, making great progress at its Tent Mountain Mine, Canada, and looks set to benefit from China resetting coal import quotas.

The junior, which listed on the ASX in September, has targeted a fast mining re-start at its Tent Mountain Mine in Canada’s premier coal mining region in Crowsnest Pass, Alberta, with first coal shipments planned for 2022. 

And that is not all. The company, which owns several Canadian-based coal projects will benefit if China opts to seek alternative coal supplies as it moves away from Australia’s coking coal industry. 

Favourable coal market

Canadian producers currently receive a US$30 per tonne premium to Australian prices.

The spot market curve remains in strong contango, indicating traders believe the current prices are low.

Montem uses the WoodMac long-term forecast price, which is significantly below the 10-year historical price of US$180 per tonne.

Chinese market

It has been reported that no ships left the largest export terminals in Queensland and New South Wales for China in December 2020, a normal schedule for arrival in China in the new year.

About 50 ships carrying Australian coal were still stranded off the Chinese coast as of December following Chinese media reports that China had formalised import restrictions targeting Australia’s $14 billion annual coal exports.

Montem’s strategy

The company plans to restart mining at its Tent Mountain Mine, which has a JORC of 60 million tonnes and proven hard coking coal (HCC), having previously sold to Japanese steel mills.

It is targeting production by 2022, having secured rail and port capacity.

Montem Resources plans to explore and develop multiple large open pit mines at its Chinook Project, which has comparable tenure and coal quality to its neighbouring Atrum Coal Ltd’s (ASX:ATU) Elan Project and Teck Resources Ltd’s Elk Valley Complex.

It also plans to explore greenfield opportunities to the north of Chinook, including 4-Stack, Oldman and Isola.

Experienced top management

The company is led by a highly skilled team, led by chairman Mark Lochtenberg, who was previously the co-head of Glencore International AG’s worldwide coal division.

Its managing director and chief executive officer Peter Doyle has 25 years of coal industry experience and is based in Canada.

With more than 30 years’ experience in the coal industry, chief commercial officer Bob Bell was previously from Teck Coal.

Tent Mountain Mine

Over the past three years, Montem has significantly de-risked the project, having completed pre-feasibility and definitive feasibility studies and major permits already granted.

It has completed 7,000 metres of drilling which has confirmed the quality of tier 2 HCC, which is a 13% discount to premium HCC.

Its restart application has been submitted to the AER in the fourth quarter of 2020.

The pre-construction mine design finalisations are expected in the fourth quarter of 2020 to the second quarter of 2021 while preliminary construction earthworks are expected in the second half of 2021.

Montem is seeking a minority joint venture partner at the mine.

Chinook Project with premium HCC

This project has world-class potential, with premium HCC.

A large resource upgrade is starting to be defined at Chinook Vicary.

The Vicary mine exported 100% to Japan steel mines and has three previous underground mines.

Drilling in September/October confirmed the occurrence of near-surface, structurally thickened zones of coal, with cored coal seams up to 22 metres thick.

It is 15 kilometres from rail infrastructure.

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