Completes Consolidation of Coal Licences in Groundhog
Perth, Aug 29, 2014 AEST (ABN Newswire) - Atrum Coal NL (
ASX:ATU) (ATRCF:OTCMKTS) is pleased to announce it has acquired a large package of granted coal licences and one coal licence application from Anglo Pacific Group PLC ("Anglo Pacific") (LON:APF) (TSE:APY).
Executive Director, Mr Russell Moran said:
"The Groundhog coalfield in British Columbia, Canada boasts the world's largest high grade and ultra-high grade anthracite endowment and we now own all the known anthracite-bearing tenure. Our long term strategy is to ultimately become the world's largest exporter of high grade and ultra-high grade anthracite."
Commenting on the acquisition, Julian Treger, Chief Executive Officer of Anglo Pacific, said: "This transaction is consistent with Anglo Pacific's strategy of monetising equity investments and growing our portfolio of royalties. We look forward to working with the Atrum Coal management team on the development of these coal properties in Canada."
The acquisition includes 20 granted coal licences and one coal licence application, collectively covering an area of 10,235 hectares, and represents the complete consolidation of all the known anthracite-bearing tenure in the Groundhog and Panorama Coalfields.
ACQUISITION TERMS
Material terms of the acquisition include a 1% gross revenue royalty or a US$1/tonne royalty (whichever is the higher) payable on anthracite produced from the assets acquired from Anglo Pacific only, US$500,000 payable in cash, a US$2.0m 8% promissory loan note repayable within 18 months, and 1,000,000 Atrum shares, which are escrowed for 18 months from the date of issue.
ACQUISITION RATIONALE
The coal licences that are being acquired have been under-explored and could hold significantly more anthracite than has been reported. Furthermore, it is likely that the mine plan at Groundhog North, which underpins the recent PFS, can be extended as the anthracite seams continue west into the new coal licences.
As a matter of priority, the Company plans to incorporate the newly acquired coal licences into the upcoming PFS revision for Groundhog North, which is expected to deliver substantial improvements in CAPEX, OPEX and project economics above what is already a tier one development opportunity.
VP Operations, Ben Smith commented:
"The additional tenure adds a significant amount of upside to an already impressive resource. Our planned initial mine, Groundhog North, will already be a large mine. However, this occupies only a relatively small area compared to the overall tenure available to us. The Anglo tenement acquisition adds even further to this.
Specifically, the acquisition of the Anglo tenements will significantly extend the Groundhog North mining domain. A greater mining footprint in this area will allow the mine to operate for a far longer period and therefore make more effective use of planned project infrastructure. A number of other synergies from the acquisition are being actively investigated with the view to incorporating these into a revised Pre-Feasibility Study. Such measures would likely result in a higher NPV and IRR for Groundhog North.
The Company has recently embarked on an extensive marketing effort in Korea, Japan and China to potential customers. These discussions were very successful. The Board is confident that the acquisition of the Anglo Pacific coal tenure is the right strategic move and will provide many positive synergies with the rest of the existing area."
ABOUT ANGLO PACIFIC GROUP
Anglo Pacific is a global natural resources royalties company. The strategy of the group is to expand its mineral royalty interests in long-life mining assets. The group achieves this through both direct acquisition and investment in projects at the development and production stage. Anglo Pacific currently generates royalty revenues from the Kestrel and Crinum coal mines in Queensland, a producing gold/copper mine in Spain and iron ore mines in Brazil.
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About Atrum Coal Limited
Atrum Coal Limited (ASX:ATU) is a metallurgical coal developer. The Company flagship asset is the 100%-owned Elan Hard Coking Coal Project in southern Alberta, Canada. Elan hosts large-scale, shallow, thick, hard coking coal (HCC) deposits with a current JORC Resource Estimate of 298 Mt (70 Mt Indicated and 228 Mt Inferred). Comprehensive quality testing of Elan South coal on samples from the 2018 exploration program, combined with review of substantial historical testwork data for the broader Elan Project, has confirmed Tier 1 HCC quality.
The initial focus for development is the Elan South area, which is located approximately 13 km from an existing rail line with significant excess capacity, providing direct rail access to export terminals in Vancouver and Prince Rupert. Elan South shares its southern boundary with Riversdale Resources Grassy Mountain Project, which is in the final permitting stage for a 4.5 Mtpa open-cut HCC operation. Around 30km to the west, Teck Resources operates five mines (the Elk Valley complex) producing approximately 25 Mtpa of premium HCC for the seaborne market.
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