Coalspur Mines Limited (ASX:CPL) Acquires 6 Strategic New Coal Leases In Alberta, Canada
Perth, June 16, 2010 AEST (ABN Newswire) - Coalspur Mines Limited (
ASX:CPL) (PINK:CSPZF) is pleased to announce that it has entered into an agreement for the acquisition of 6 coal leases held by a private Canadian corporation in Alberta, Canada ("New Leases").
The New Leases are contiguous with the existing Hinton Coal Project ("HCP") and contain a Coal Resource of 438 million tonnes with an associated Mine Permit. The New Leases are made up of two sections:
- McLeod River North leases, which include 5 Crown coal leases and are located to the east of Hinton East; and
- Z-Block lease, which is located in between Hinton East and Hinton West.
----------------------------------------------------------------Table 1: JORC Coal Resources---------------------------------------------------------------- Measured Indicated Measured& Inferred Measured, Indicated Indicated& Inferred (Mt) (Mt) (Mt) (Mt) (Mt)----------------------------------------------------------------New Leases-McLeod RiverNorth 183.1 129.0 312.1 12.6 324.7----------------------------------------------------------------New Leases-Z Block 51.8 27.1 78.9 34.8 113.7----------------------------------------------------------------Total New LeasesResource 234.9 156.1 391.0 47.4 438.4----------------------------------------------------------------Existing HCP Resource 298.4 123.2 421.6 45.7 467.3----------------------------------------------------------------Combined CoalResource 533.3 279.3 812.6 93.1 905.7----------------------------------------------------------------
Commenting on the acquisition, Mr Gene Wusaty, Managing Director and CEO, said "This transaction is a significant milestone as it gives us a combined property with all the fundamentals to become one of the largest export thermal coal mines in North America. The combination of a very large, gently dipping coal resource which extends for approximately 20km and the availability of port and rail infrastructure capacity make this a unique, world class project."
"Our scoping study completed earlier this year has already shown that the existing HCP can be mined with low operating costs. We will now commence a Pre-Feasibility Study to determine the substantial mining synergies, increased production rate and longer mine life which we anticipate can be achieved with the combined project."
The commercial terms of the agreement provide for the payment of an upfront option fee of C$6.5 million with a further C$83.5 million payment on or before 15 November 2010, upon which it will secure 100% of the New Leases ("Transaction") The acquisition will be financed from existing cash reserves and a Project Funding Facility from the Highland Park Group ("Highland Park") - see Commercial Terms section for further information.
The total acquisition cost represents a transaction multiple of C$0.205 (approximately A$0.235) per tonne of Coal Resource.
Project Highlights
Coalspur is pleased to report that it has entered into an option agreement to acquire one of the largest export quality thermal coal projects in Alberta, Canada. Upon completion, the consolidation of the leases in the Hinton region will propel Coalspur into the upper echelon of potential export thermal coal developers in North America targeting the supply of export quality thermal coal to the growing Asian markets in the short to medium term.
The Company will now focus future studies on maximising the development of the Coal Resource which will include but is not limited to investigating the following opportunities:
- Increasing the proposed ultimate production rate from the combined coal resources;
- Extending the proposed mine life to at least 20 years;
- Optimising the mining strip ratios by utilising the 20km strike length to provide for increased returns and quicker payback;
- Realising economies of scale in all facets of the development including mine planning, processing, handling, infrastructure and capital efficiency;
- Incorporating a dragline into the mine plan to drive the costs of the mine operations into the lowest quartile of first world exporters (draglines typically have the lowest unit cost of production out of all surface mine equipment configurations); and
- Utilise the existing Mine Permit to attempt to reduce the time to first production.
Coal Resource
The Coal Resource estimate on the New Leases has been based on considerable drilling and exploration activities previously undertaken by a prior holder of the New Leases in the 1970's, 1980's and 1990's. The report has been prepared by respected Canadian independent technical consultants, Moose Mountain Technical Services ("MMTS") and is reported in accordance with the JORC Code (2004) and National Instrument 43-101 ("NI 43-101").
Key points from work conducted by MMTS on the New Leases are as follows:
- The New Leases Coal Resource of 438.4Mt is comprised of Measured Resources of 234.9Mt, Indicated Resources of 156.1Mt, and Inferred Resources of 47.4Mt;
- The Coal Resource on the New Leases is defined from three coal zones that have a cumulative coal thickness of approximately 28m;
- The three coal zones which comprise the Coal Resource on the New Leases have a dip to the northeast ranging from 4o - 15o, which has resulted in the Coal Resource being defined within a 6.03:1 strip ratio pit.
Figure 3 presents the 20:1 incremental cut-off strip ratio pit used across the combined projects to define the resources according to JORC Code and NI 43-101 standards (refer to link at the bottom of release).
The Coal Resource on the New Leases has been classified as Measured, Indicated and Inferred by MMTS based on the guidelines specified in the JORC Code (2004) and NI 43-101.
The Coal Resource estimate prepared by MMTS for the New Leases has been based on:
- A total of 137 rotary and diamond drill holes (totalling 9,476m) previously drilled by a prior holder of the New Leases, comprising 22 diamond drill holes (totalling 1,396m) and 115 rotary drill holes (totalling 8,350m);
- A 6.03:1 strip ratio pit (modelled using a 20:1 incremental cut-off strip ratio);
- A modelled pit using 45DEG walls and set up such that only coal within the New Leases is mined (and assuming that waste in the pit wall can be mined on neighbouring properties);
- A minimum mineable seam thickness of 0.5m. Canadian standards require a minimum mineable seam thickness of 0.45m and a number of operating mines in the region currently mine coal seams of less than 0.45m.
- A minimum removable parting thickness of 0.3m (partings less than 0.3m are included in the coal seam); and
- A range of specific gravity values from 1.53 to 1.61.
Coal Quality
MMTS have also undertaken an indicative assessment of coal quality based on historical core hole information completed by a prior holder of the New Leases which concluded that the Project's final clean product could have the following characteristics:
---------------------------------------------------------Table 2: Project Washed Clean Coal Quality---------------------------------------------------------Coal Characteristic Gross As Received Air Dried Basis---------------------------------------------------------Moisture 11.5% 4.5%Ash Content 11.1% 11.9%Volatile Matter 31.2% 33.7%Fixed Carbon 46.2% 49.9%Sulphur 0.3% 0.3%---------------------------------------------------------Calorific Value 5,758 kcal/kg 6,212 kcal/kg---------------------------------------------------------
The above analysis on a gross as received basis assumes a stable moisture content of 11.5%. It is noted that further test work and engineering will be conducted during the feasibility studies to confirm these conclusions. Forecast yield (percentage recovery of coal following washing) is expected to be approximately 54% and coal with the above qualities is generally suitable for export to the Pacific Rim market. Washability studies are nearing completion and will provide additional results.
Commercial Terms
Acquisition of New Leases
Coalspur Mines (Operations) Limited ("Coalspur Operations"), an indirect wholly owned subsidiary of Coalspur Mines Limited, has entered into an option agreement to purchase the New Leases with a private Canadian corporation ("Vendor"), which grants Coalspur Operations the right to acquire the following Crown coal leases:
---------------------------No. Lease Approximate Area (Ha)---------------------------1. 1307070587 7682. 1307070588 9923. 1308050904 644. 1308050905 1125. 1399080001 1,1046. 1307060429 768---------------------------Total 3,808---------------------------
Pursuant to the Agreement, the consideration payable to the Vendor is as follows:
1. Upon execution - C$6.5 million;
2. At completion - C$83.5 million.
Completion is to occur no later than 15 business days after Coalspur Operations provides a written notice to the Vendor of the exercise its option. Coalpsur Operations has until 25 October 2010 to provide the written notice to the Vendor. Title to the New Leases is transferred to Coalspur Operations at completion.
The Agreement also provides for the transfer (to the extent that it is possible) of the associated Mine Permit to Coalspur Operations.
The Agreement allows Coalspur Operations to undertake exploration drilling activities on the New Leases prior to completion of the acquisition.
The Agreement includes typical warranties and indemnities for coal lease acquisitions in Alberta, Canada, including limited warranties as to title and environmental issues. Coalspur has provided a guarantee as the ultimate parent entity of Coalspur Operations.
Project Funding Facility
Coalspur has entered into a binding Funding Agreement with Highland Park S.A. The Funding Agreement provides a facility of A$65 million for Coalspur to use in funding the acquisition of the New Leases on the following key terms and conditions:
1. Fund amount of up to A$65 million;
2. Interest is payable every 180 days and is based on the Bank Bill Swap Rate ("BBSY") plus 5%;
3. Facility type - secured;
4. Facility draw down before 31 December 2010 and repayable within 2 years from draw down;
5. Coalspur may repay the facility earlier at its discretion;
6. Amount of the draw down of the facility is at Coalspur's discretion, subject to certain standard conditions being met, including:
a) necessary shareholder approvals (including as outlined in item 7 below);
b) execution of formal security and other transaction documents;
7. Subject to shareholder approval before 31 August 2010, a facility fee of 15 million unlisted options (exercisable at $0.80 within 3 years from the date of issue) is required to be issued by Coalspur. If shareholder approval is not obtained by the required date, then a cash fee of $250,000 plus 50% on the intrinsic value of the options, is payable.
Grant of Incentive Options
The Company also intends to grant, subject to shareholder approval, 2.0 million incentive options, each exercisable at $0.80 within 3 years from the date of issue, to Mark Pearce, a Director of the Company.
For the full Coalspur announcement, please refer to the following link:
http://www.abnnewswire.net/media/en/docs/63089-ASX-CPL-494406.pdf
About Coalspur Mines Limited
Coalspur Mines Limited (ASX:CPL) (TSE:CPT) is a coal development company with approximately 55,000 hectares of coal leases located within the Hinton region of Alberta, Canada. Coalspur's flagship project is Vista, which covers approximately 10,000 hectares and provides a large scale, surface mineable, thermal coal development. Vista is located adjacent to CN Rail's main line, which is suitable for the transport of coal to deepwater ports on Canada's west coast. Coalspur has secured a port allocation agreement with Ridley Terminals Inc., which is essential to the logistics supply chain necessary to export coal from Vista to the growing demand from the Asia Pacific countries.
| ||
|
