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August 2017
MODERN MINING
37
COAL MINING
A
SX-listed Acacia Coal says that among the highlights
of its June quarter was the release of a Pre-Feasibility
Study (PFS) for the Riversdale Anthracite Colliery
(RAC) project. The reporting period also saw the
completion of an updated resource statement (which demon-
strated an increase in total resources to 10 Mt, of which 86 % lie
in the measured and indicated categories), the commencement
of discussions to secure offtake agreements for the project and an
application to transfer the RAC project licences from Rio Tinto.
Acacia Coal has an exclusive option, in partnership with
African Onca Limited, to acquire the Mining Right for the RAC
from a subsidiary of Rio Tinto and its partner Khulani Resources.
The company says it will require further capital in order to
fund its proposed activities through to March 2018 (including
the next payment due to the underlying vendors of RAC and the
completion of a Bankable Feasibility Study on the RAC project).
The RAC project covers an area of 2 716 ha in the southern
portion of the Vryheid coalfield. It is centred around the Kwa-
Ntabankulu mountain located 30 km south-east of Vryheid.
According to Acacia, the results of the comprehensive PFS
prepared by VBKOM, a South African-based mining consultancy,
surpassed expectations for the project at the time of securing the
option to acquire RAC.
The study shows that the project is estimated to cost just A$24
million to build on an outsourced operational model, with sus-
taining capital of A$7,85 million, and is forecast to generate an
average 438 000 tonnes of sales per annum for an initial eight-
year mine life.
Based upon an average selling price of A$125,1/tonne FCA
mine gate and an effective 6 % royalty rate, the project study
demonstrates a cash margin after tax of A$34,40/t.
The PFS found that these financial parameters would result in
an outstanding internal rate of return of 53 % and underpin a Net
Present Value at a 10 % discount rate of A$73 million.
Commenting at the time of the release of the PFS, Acacia MD
Hugh Callaghan said the combination of the extremely high
quality nature of the RAC coal and the declining inventory of
metallurgical coal in South Africa was at the heart of the project’s
strong outlook.
Metallurgical test work conducted as part of the PFS found
the RAC coal was ideal for use in South Africa’s ferrochrome
industry, which is struggling to source sufficient quantities of low
phosphorus and low sulphur anthracite.
Callaghan said these factors were responsible for the strong
price environment which, when coupled with RAC’s low costs,
would enable the project to enjoy robust margins.
The trade-off and detailed optimisation studies delivered an
optimal development scenario of an average 60 000 tonnes per
month underground mining operation using conventional mining
in a bord-and-pillar configuration. It is envisaged that three adits
will be developed and six sections established in a phased ramp-
up. The mining operation would be undertaken by a contractor
with 70 % of the equipment fleet being provided by Acacia.
Acacia Coal
achieves key
milestones in June quarter