Modern Mining August 2017

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

August 2017  MODERN MINING  37