Colonial Coal Announces Results of a Preliminary Economic Assessment FOR an Open Pit Only MINE at Its Huguenot Project
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COLONIAL COAL INTERNATIONAL CORP.
Suite 200 -595 Howe Street, Vancouver, British Columbia, Canada, V6C 2T5
Telephone: (604) 568-4962
PRESS RELEASE
COLONIAL COAL ANNOUNCES RESULTS OF A PRELIMINARY ECONOMIC
ASSESSMENT FOR AN OPEN PIT ONLY MINE AT ITS HUGUENOT PROJECT
Vancouver, B.C., Canada – November 26, 2019 – Colonial Coal International Corp. (TSX-V:
CAD) (the “ Company” or “ Colonial Coal ”). David Austin, Colonial Coal’s President and
CEO, is pleased to announce the results of a recent Preliminary Economic Assessment (the
“PEA”) for a stand-alone open pit option at th e Company’s 100% owned Huguenot coking coal
property (the “ Huguenot Project”) located approximately 85 kilometres southeast of Tumbler
Ridge in northeast British Columbia.
This PEA for the stand-alone open pit mine on the Huguenot Project is preliminary in
nature and there is no certainty that the forecast results stated in the PEA will be realized.
In addition, the PEA includes inferred mi neral resources that are considered too
speculative geologically to have the economic considerations applied to them that would
enable them to be categorized as minera l reserves, and there is no certainly that the
preliminary economic assessment will be realiz ed. Furthermore, mi neral resources that
are not mineral reserves do not have demonstrated economic viability.
The PEA report, prepared by Stantec Consulting Services Inc. (“ Stantec”) in accordance with
CSA National Instrument 43-101 (“ NI 43-101 ”) standards, will be completed and filed on
SEDAR (the System for Electron ic Document Analysis and Retrieval) within 45 days. The
results of the PEA show that the Huguenot Proj ect continues to demonstrate positive economics,
has viable development options and is worthy of advancement.
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The current PEA report builds upon an origin al PEA report prepared in 2013 by Norwest
Corporation that was updated in 2018 by Norwest, now Stantec, using then current scoping level
cost estimates and economic analyses. The mi ning studies previously reported (September 24,
2013 and July 10, 2018 and by way of corresponding 43-101 Technical Report filings) were
based upon exploiting the coking coal resources by a combinati on of open pit and underground
mining methods. During the 2018 update, Stantec recognized an opport unity to significantly
expand the open pit to higher stri pping ratios, with correspondingly higher recoverable tonnages
of surface mineable coal, ther eby creating the opportunity to examine a surface stand-alone
mining option in a new PEA.
This PEA does not include any further eval uation of the underground resources nor any
potentially mineable coal associated with these resources.
For the current study, Stantec used previously re ported surface mineable resources to develop a
revised conceptual mine plan to exploit the coal resources utilizing a st and-alone open pit, in
contrast to the previous approach of a co mbined open pit and underground mine. Stantec
completed a more detailed analysis of the open pit design and equipment selection than was
carried out previously, that yi elded larger mineable open pit tonnage, longer mine life and a
lower cost mining operation. In addition, alternative means of product coal transportation were
considered which resulted in a revised plan to transport coal by conventi onal haul trucks from
the mine to the existing rail li ne south of Tumbler Ridge, as oppos ed to the previous concept of
direct rail transport from th e mine. The trucking concept ha s the advantage of lower capital
costs, lower risk and a shorter construction schedule than the rail option.
Highlights of the revised PEA report are summarize d below. All costs are in US dollars but,
where Canadian dollar equivalent s are provided, they have been converted using an exchange
rate of US$1.00 equals CAD$1.316.
A summary of the financial analyses is presente d in the following tables ; the results show the
after tax (including royalty) net present values (NPVs) at various discount rates and internal rates
of return (IRRs) for a range of coal prices. For the benchmark coal price, Stantec has used
US$174 per tonne. They note that, while a discount may be applied to the benchmark price for
Huguenot product coal, they consider the potential discount to be within the range of values
presented in the tables below.
The capital expenditures are based on two scenarios. The first scenario assumes that all major
mining equipment is purchased outright in th e year in which it is required for the mining
operation. This includes replacements as they are required over the life of the mine. The second
scenario assumes that the major mining equipmen t will be leased in the year in which it is
required for the mining operation and that replaceme nts will also be leased when the equipment
needs to be replaced.
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PURCHASED EQUIPMENT SCENARIO (US$)
PURCHASED EQUIPMENT SCENARIO (CDN$)
L EASED EQUIPMENT SCENARIO (US$)
LEASED EQUIPMENT SCENARIO (CDN$)
Based on the purchased equipment scenario the financial analysis suggests that
the coal price required to achieve a zer o NPV at discount rates of 5%, 7.5% and
10%, respectively, is about US$113, US$120 and US$125 per tonne. A coal price
of US$137 per tonne is required for an IRR of 15%.
Based on the leased equipment option the fi nancial analysis suggests that the coal
price required to achieve a zero NPV at discount rates of 5%, 7.5% and 10%,
respectively, is about US$114, US$119 a nd US$125 per tonne. A coal price of
US$137 per tonne is required for an IRR of 15%.
Measured and Indicated surface mineable coal resources total 132.0 million
tonnes, with an additional Inferred resource of 0.5 million tonnes. Not included in
the current PEA are in-situ underground mineable resources totaling 145.7 million
tonnes (Measured and Indicated) and 118.7 million tonnes classified as Inferred.
5.0% 7.5% 10.0% IRR (%)
US$174/T $1,482 $1,027 $718 26.3%
US&157/T 1,072$ 713$ 470$ 21.0%
US$191/T 1,891$ 1,340$ 965$ 31.4%
NPV (US$M) at Varying Discount Rates with IRRCoal Price
5.0% 7.5% 10.0% IRR (%)
CDN$229/ $1,949 $1,351 $944 26.3%
CDN$207/ 1,410$ 938$ 618$ 21.0%
CDN$251/ 2,488$ 1,763$ 1,270$ 31.4%
Coal Price NPV (CAD$M) at Varying Discount Rates with IRR
5.0% 7.5% 10.0% IRR (%)
US$174/T $1,474 $1,032 $732 29.4%
US&157/T 1,063$ 717$ 483$ 23.0%
US$191/T 1,883$ 1,345$ 979$ 35.5%
NPV (US$M) at Varying Discount Rates with IRRCoal Price
5.0% 7.5% 10.0% IRR (%)
CDN$229/ $1,939 $1,357 $963 29.4%
CDN$207/ 1,399$ 943$ 636$ 23.0%
CDN$251/ 2,478$ 1,770$ 1,289$ 35.5%
Coal Price NPV (CAD$M) at Varying Discount Rates with IRR
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The current PEA economic analysis is base d on a conceptual open pit mine plan
targeting 99 million run-of-mine (“ ROM”) tonnes of resource at an overall
stripping ratio of 10.5:1 (bank cubic metres (bcm):ROM tonnes), yielding 72
million tonnes of product coal over a mine life of 27 years. The previous PEA
identified a smaller open pit with ROM tonnage of 56 million tonnes at a stripping
ratio of 8.6:1, that yielded 39 million tonnes of product coal over 13 years.
Projected clean coal production from ope n pit mining operations ranges from 0.7
million tonnes per annum (“ Mt/a”) to 3.0 Mt/a, averaging approximately 2.7
Mt/a.
Potential coal production is identified as hard coking coal similar to coking coal
currently exported from northeast British Columbia.
The stand–alone open pit cash operating costs for the purchased equipment
scenario are estimated at US$55.08 per tonne of product coal at the mine gate.
The cash operating costs for the leased equipment scenario are estimated at
US$61.47 per tonne.
Estimated direct operating plus offsite costs for the purchased equipment scenario
(i.e., FOB cost), total US$91.90 per clean tonne (excluding production taxes and
royalties). The FOB cost for the leased equipment scenario is estimated at
US$98.29 per clean tonne (excluding production taxes and royalties)
Pre-production capital cost for the propos ed mine in the purchased equipment
scenario is estimated at US$510 million, with additi onal sustaining capital of
US$215 million over the life-of-mine (LOM). Pre-production capital cost in the
leased equipment scenario is esti mated at US$303 million, with additional
sustaining capital of US$42 million over the LOM.
The Huguenot Project’s proposed payback of initial capital is estimated within
four years from start-up of operations for both scenarios.
This press release has been reviewed and the scie ntific and technical disclosure disclosed herein
approved by Derek Loveday, P.Geo., of Stantec, a Professional Geologist and a Qualified Person
as defined in NI 43-101.
Neither the TSX Venture Exchange nor its Regu lation Services Provider (as that term is
defined in the policies of the TSX Venture Exch ange) accepts responsibility for the adequacy
or accuracy of this release.
About Colonial Coal International Corp.
Colonial Coal is a publicly traded coal corporati on in British Columbia that focuses primarily on
coking coal projects. The nor theast Coal Block of British Columbia, within which our
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Corporation’s projects are located, hosts a number of proven deposits and has been the subject of
M&A activities by Anglo-American and others. Additional information can be found on the
Company's website www.ccoal.ca or by viewing the Company's filings at www.sedar.com.
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For further information please contact:
Colonial Coal International Corp.
Shane Austin
604.568.4962
www.ccoal.ca