Low Cost Highwall Mining to Commence at Isaac Plains Coking Coal Mine
Brisbane, June 15, 2016 AEST (ABN Newswire) - Stanmore Coal Limited (
ASX:SMR) (Stanmore or the Company) is pleased to announce that the Company has awarded a contract to UGM Highwall Mining Pty Ltd (UGM) to commence highwall mining operations at Isaac Plains. Highwall mining represents a short term, low cost, low impact incremental increase to production from the existing disused S2 pit in the south of the mining lease. The introduction of incremental highwall mining production provides benefits to Stanmore in better utilising the significant infrastructure and fixed cost base already in place for the Isaac Plains open cut mining operations.
Highlights:
- Highwall mining contract signed, targeting extraction of over 300,000 ROM tonnes of low cost coal in addition to the existing open cut operation
- This additional coal will be extracted at an estimated 20% lower FOB cost than the existing open cut and will be used to supply to existing and new steel customers in Asia
- Up to 80,000 ROM tonnes per month of previously uneconomic coal will be extracted from the disused S2 pit from June to October 2016
Highwall mining activities are geographically separate from the existing open cut operations in the northern pits and have no impact on open pit production. Increased coking coal production is planned to be first utilised for the existing steel customers in Asia with any surplus tonnage potentially being used to establish new customers.
HIGHWALL MINING OVERVIEW
Highwall mining is a low cost, low impact mining method to extract otherwise uneconomic coal at the end of an open cut pit life. It has been extensively used in the USA and Australia including at Glencore's Newlands and Ulan mines and Anglo American's Dawson mine. The highwall mining equipment is operated remotely meaning there are no personnel underground.
HIGHWALL MINING DESIGN
Stanmore and UGM have engaged a leading geotechnical consultancy to carry out the geotechnical investigation and design of the highwall mining area including cut width and barrier sizing. Stanmore and UGM have worked closely with the relevant State government departments in relation to the planned highwall mining extraction method. A revised Plan of Operations has also been submitted and accepted by the Department of Natural Resources and Mines which reaffirms the approach and process undertaken by the Company.
Within the target highwall mining zone of the S2 pit, 100% of the area is covered by JORC compliant Measured Resources per the report released by the Company in April of this year. The Isaac Plains Mining Lease Resource was estimated at 48.2 Mt, comprised 15.2Mt Measured, 23.03Mt Indicated and 10.0Mt Inferred categories. This provides the Company with a high degree of comfort over the coal seam, structure and likely mining conditions within the target highwall mining zone. In addition, the highwall mining zones have been designed so as not to interfere with future access to the underground resource which is being investigated as a potential bord & pillar operation.
CONTRACTING APPROACH
The contract for highwall mining rewards UGM for delivery of run-of-mine coal to the pad on the S2 pit floor. The UGM contract is designed around a ROM production target of 70,000 tonnes per month at a dollar rate per ROM tonne. Overall the contract term is around 5 months with over 300,000 ROM tonnes targeted within the existing highwall of the S2 pit.
Stanmore is responsible for the provision of certain services including water and power connectivity. Golding Contractors Pty Ltd (Golding) has been awarded ROM coal haulage services for delivery of mined coal to the processing plant where Golding will also then process the coal to deliver high quality coking and thermal products. In addition, Golding's current roles and responsibilities for statutory positions and safety systems at site will apply over the highwall mining operations with all safety procedures, inductions and other activities reporting through the single Golding interface. This is key to ensure a smooth continuation of the strong safety culture and focus to date which has resulted in nil lost time and nil reportable injuries.
Given the geographical separation between the open cut operations in the northern pits and highwall mining in the southern pits of the Isaac Plains mining lease, there is limited interface between the two mining zones.
Nick Jorss, Managing Director of Stanmore, said, "We are very pleased to have signed this contract with UGM after more than 12 months of preparation, detailed design and discussions with relevant State representatives. Highwall mining is an attractive option for Stanmore at Isaac Plains given the potential to produce low cost, low impact incremental tonnes of coking coal to be sold to existing and new customers.
The additional coal is expected to be produced at an FOB cost which is around 20% lower than the current open cut cost, given the largely fixed nature of the infrastructure costs which are already covered by open cut mining operations."
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ABOUT UGM
The UGM Group history is steeped in underground coal mining and providing support to international mining houses in the Hunter Valley and Illawarra, NSW and the Bowen Basin coalfields of QLD. From providing whole of mine operational support including the supply and maintenance of continuous miners through to LHD's and man transporters, UGM have continued to grow through the provision of quality, safe and cost effective solutions for customers. In 2014, UGM acquired leading highwall mining specialist, ADDCAR Highwall Mining Systems based in Kentucky, USA.
About Stanmore Coal Limited
Stanmore Coal (ASX:SMR) is an operating coal mining company with a number of additional prospective coal projects and mining assets within Queensland's Bowen and Surat Basins. Stanmore Coal owns 100% of the Isaac Plains Coal Mine and the adjoining Isaac Plains East Project and is focused on the creation of shareholder value via the efficient operation of Isaac Plains and identification of further local development opportunities. Stanmore continues to progress its prospective high quality thermal coal assets in the Northern Surat Basin which will prove to be valuable as the demand for high quality, low impurity thermal coal grows at a global level. Stanmore’s focus is on the prime coal bearing regions of the east coast of Australia.
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