Name of the Project
Buck Creek coal mine complex project.

Location
The Buck Creek mine complex is located in the Western Kentucky region of the Illinois basin, which is one of the most prolific coal-producing regions in the US.

Project Owner/s
Paringa Resources.

Project Description
The coal mining complex includes the staged, modular development of the 2.8-million-tonne-a-year Poplar Grove and 3.8-million-tonne-a-year Cypress mines.

An expanded bankable feasibility study (BFS) completed on Poplar Grove in March has incorporated a second coal seam to the mine – the Western Kentucky No 11 (WK 11) coal seam – resulting in a 56% increase in mine production to 2.8-million tonnes a year. The original BFS, which included the Western Kentucky No 9 (WK 9) coal seam, considered a 1.8-million-tonne-a-year operation.

Access to the WK 9 seam will be through a low-cost boxcut excavation followed by three decline drifts excavated using continuous mining equipment.

Paringa will access the WK 11 seam from the northern limb of Poplar Grove’s mine plan by 2020 through an incline, excavated using continuous mining equipment.

In 2033, Paringa will access the WK 11 seam from the southern limb of Poplar Grove’s mine plan.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The combined net present value (NPV) of both mines, at an 8% discount rate, has been estimated at $655-million. On a standalone basis, the NPV of the projected cash flows from the initial Poplar Grove mine has been estimated at $310-million at an 8% discount rate, with an internal rate of return of 42%.

Capital Expenditure
The expanded BFS has estimated total capital expenditure (capex) for the initial construction of Poplar Grove at $44.7-million. Capital for construction of the WK 11 incline and vertical shafts is estimated at $15.8-million, which will be funded from Poplar Grove’s operating cash flow.

Capex at the Cypress mine has been estimated at $101.8-million.

Planned Start /End Date
Construction of the Poplar Grove mine started in August 2017. First coal is expected 12 months from the start of construction.

Latest Developments
Paringa Resources has achieved record productivity rates at its Poplar Grove mine, where underground activities are undertaken by the first mining unit (Unit 1), comprising two continuous mining machines (CMs).

During the week of June 10, the company achieved a peak mining rate of 306 ft of material being cut in a shift, equalling a 100% increase on the week before.

Unit 1 has now completed the majority of bottom development, with construction of the ventilation overcasts being the only remaining project, which is expected to be commissioned in the coming weeks, Paringa has said.

Commissioning of the overcasts will allow for the mining unit to be ventilated in a manner known as “split ventilation”, which will allow for the CMs to operate concurrently, further boosting productivity.

Paringa has reported that softer-than-expected cutting conditions are leading to reduced consumption of bits for the CMs and roof bolters, and using of less expensive bits. The estimated costs savings are estimated at $1.5-million a year when compared with the bankable feasibility forecast.

All underground and surface mobile equipment necessary for the operation of two mining units is on site, and Paringa has said it is hiring hourly employees in expectation of commissioning Unit 2 over the coming months.

Paringa will also seek approval from the Mine Safety and Health Administration (MSHA) for an extended cut plan, with the potential for cut depths to be significantly increased from the current 20 ft limit.

This approval, coupled with split ventilation, will allow for another major step-change in mining productivity, Paringa has said, adding that all other surrounding mines in the region have received MSHA extended cut approval, with customary approval limits of up to 40 ft.

The recent increase in productivity is largely attributable to mining operations having progressed beyond the challenging conditions caused by a paleochannel intersecting the mine workings.

Paringa has further noted that it remains on track to achieve steady-state productivity rates of 560 ft a shift for Unit 1 and Unit 2 operations before year end, equating to the production of 1.8-million tonnes a year of saleable product on an annualized run-rate basis.

The coal handling and preparation plant and other surface infrastructure are functioning well, Paringa has said, with plant yield increasing as out-of-seam dilution decreases.

Dilution during commissioning is largely attributable to underground construction activities, with additional waste rock mined to create space for underground infrastructure.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
The project remains on track.

Contact Details for Project Information
Paringa Resources, MD and CEO Grant Quasha, tel +61 8 9322 6322 or email gquasha@paringaresources.com.