Apr 07, 2016

New Central Highlands mine on near horizon

New Central Highlands mine on near horizon

U&D Coal is poised to begin construction in the second half of this year for its Meteor Downs South open-cut mine in Central Queensland.

The Brisbane-based company says that timeframe is subject to market conditions and a favourable transport solution.

U&D Coal is developing the thermal coal project between Springsure and Rolleston with joint venture partner Sojitz Coal Mining, operator of the nearby Minerva mine.

It expects to bring it online for under $30 million, according to chief financial officer Peter Edwards.

After being granted a mining lease for Meteor Downs South late last year, Mr Edwards said the proponents were now concentrating on the best transport solution to get the coal to market.

“We have a very low cost mine with Meteor Downs South,” he said.

“Our key focus at the moment is identifying a suitable transport solution – road, rail and port – that will make the project more profitable rather than being on the margins.”

While the option of building the project’s own rail loop was a good one economically, Mr Edwards said the drawback would be the potential delay this could have on production, so the proponents were favouring a shared rail arrangement.

U&D is keen to see an early start to coal production to generate a revenue stream.

Mr Edwards said the mining downturn had created some favourable conditions for developing new projects such as better equipment deals and contractor rates.

“We see now as being a very good time to commence mining and I’m sure a number of our competitors would see it the same way – although capital and getting investors interested is a bit of a problem,” he said.

Mr Edwards said Sojitz would be operating the Meteor Downs South mine and they would be managing the workforce, equipment and supplier requirements.

“But the strategy we discussed with them is really very much centred on the use of the local community, with the mine planning to use a locally-based workforce and service providers where possible,” he said.

“We’re very close to Springsure and Rolleston and we would be looking ideally to have members of the local community engaged in our mining operation.”

Mr Edwards said Meteor Downs South would be a relatively small mine, producing about 1.5 million tonnes of export-grade thermal coal per year at full production.

With a 13 million-tonne reserve, the company currently expects an eight to 10-year mine life.

Early estimates are that it will require an operational workforce of about 30 fulltime jobs, with additional jobs created during the construction phase.

Establishment of the operation will not include a coal preparation and handling plant as the thermal coal is suitable for export without washing.

Mr Edwards said the proponents were considering blending the coal with product from Minerva, however, to differentiate it from the very similar material produced by Glencore at the nearby Rolleston operation.

“We would ideally be looking at having something that doesn’t directly compete with that coal,” he said.

U&D, which delisted from the ASX last year, has a raft of other coal prospects in the wings.

The most advanced of these is the Broughton coking coal project 30km north-west of Nebo.

More at http://www.udcoal.com.au/

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