Location : Surat Basin – 24km south-east of Wandoan
JORC Total Resource; 287 Mt high quality open pit thermal coal (18Mt Measured + 187Mt Indicated + 82Mt Inferred)
EPC: 1112, 2030
Ownership: 100% Stanmore Coal
Targeting a five million tonne per annum open cut thermal coal mine –
The Range Project is located 24 kilometres south east of the Wandoan township, within the Surat Basin. It is well located relative to existing key infrastructure and the planned Surat Basin Rail line, which will provide a rail link to the coal ports at Gladstone.
The project remains on track for first coal in 2016 subject to statutory approvals being attained and completion of third party infrastructure.
In late 2011, Stanmore Coal announced positive results from the Pre-feasibility Study (PFS) for The Range with improved project economics relative those in the Conceptual Mining Study completed in late 2010.
The PFS considered both owner mining and contractor mining options to produce 5 Mtpa of export coal over a mine life of 26 years, the results of which are summarised below.
Capital and Operating Costs
The development capital cost estimates are shown below for both owner and contract mining cases. The introduction of a conveyor system for transport of coal from the mine site to the Surat Basin Rail has increased capital expenditure by some $50m above the cost of the haul road proposed in the Conceptual Mining Study. However, the conveyor system will reduce operating costs and lower the risk of disruption due to potential seasonal flooding of the haul road.
Figure 1: Capital Expenditure
In the owner operator case a further $85m of mining equipment will be purchased during 2016 / 17 from operating cash flow to enable ramp up to full production.
The estimated operating costs are outlined below. Operating cost savings relative to the previous Conceptual Mining Study relate mainly to:
- the introduction of a conveyor transport system to the rail head
the identification of extensive seams of clean coal which do not need washing which has led to the introduction of a bypass circuit. The effective yield for the project has increased from 63% to 80% with the ability to pass 42% of the ROM coal through the bypass circuit creating an improvement in the operating costs per tonne of product coal
- Plus State Government Royalty estimated at $6.80. Including overheads.
The financial modelling conducted as part of the study indicates strongly positive net present values for both the owner mining case and the contractor case under a range of long term coal price assumptions.
Figure 3: Net Present Value of The Range Project
Based on Credit Suisse long term forecasts (US$120/t FOB Newcastle thermal coal price and exchange rate of 0.85 AUD/USD) and a nominal discount rate of 10.0% (WACC)
A number of additional shallow coal seams have been intersected in holes during sterilisation drilling to the west of the main deposit which appear to be in the lower Juandah sequence. Further drilling and laboratory testing is ongoing to confirm the extent and quality of these seams, and an additional Exploration Target2 of 45 – 80 million tonnes has been established in relation to this area.
Site Layout and Services
The original two pit design from the Conceptual Mining Study has consolidated to a single larger pit due to the definition of additional shallow coal from drilling conducted during the year. The siting of the Coal Handling and Preparation Plant (CHPP) and associated infrastructure has been chosen to minimise haul distances for ROM coal and avoid sterilising any potential future coal deposits.
The main power requirements are from the CHPP and two 800 tonne class electric hydraulic shovels. Demand is estimated to be between 12MW to 14MW and power is likely to come from the mains grid through Powerlink and Ergon. Alternatives such as site based, gas fired electricity generators are also being investigated and will be considered if they provide a better economic outcome. Stanmore Coal is well advanced in its negotiations with potential water providers with the two main options being nearby coal seam gas projects and Sunwater.
Figure 4: Mine Industrial Area Layout
Mine Plan and Mining Methods
The mining layout and sequence is shown in Figure 4 above. The mining schedule adopted in the PFS is similar to that used for the Conceptual Mining Study and is based on taking advantage of the shallowest depth area to the top of coal and orienting the mining such that it advances down dip wherever possible. The relatively benign seam configuration lends itself to a number of potential mining strategies.
The PFS contemplates a truck and shovel operation using 800t class excavators and a fleet of 345t ultraclass rear dump trucks.
Coal and interburden mining will be undertaken by a smaller fleet of 250t excavators, 150t class rear dump trucks and front end loaders. Coal extraction activities are designed to ensure selective clean coal production and maximise CHPP bypass potential.
The initial production workforce of approximately 400 people will be accommodated at a combination of local housing and village accommodation in Wandoan.
The mine life has increased from 18 years in the Conceptual Mining Study to 26 years largely on the basis of the enhanced yield which leads to a more optimal use of the deposit. The ROM strip ratio averages 6.7 bcm/t over the first 17 years of the mine life.
Figure 5: Mining Sequence Snapshot – 2027
Coal Handling and Preparation Plant
The proposed Coal Handling and Preparation Plant (CHPP) has been designed at a feed rate of 750tph to allow for campaign washing operations alternated with bypass operations. The front end crushing and screening system has been designed to accommodate both the washed and bypass coal streams. The CHPP will incorporate proven technologies – dense medium cyclones and spirals for product beneficiation.
The raw ash content of individual coal plies is as low as 3.7% (with an average of 20.5% air dried). Favourable raw ash levels over much of the resource allows 42% of Run of Mine(ROM) coal to bypass the wash plant and be direct shipped. This leads to 53% of product coal being direct shipped without wash plant losses. As a result of this the overall effective yield is 80% while the coal that is washed has a yield of 64%.
Coal Product Transport
A 25 kilometre overland conveyor is proposed to a train load-out facility and rail loop at the planned Surat Basin Rail (SBR) link, due for completion in 2015. The preferred tie-in point to the SBR is north of the town of Wandoan which eliminates any reliance on rail construction beyond the Wandoan mine tie in point.
Coal will be stockpiled at the rail head and then loaded to trains for railing to the Wiggins Island Coal Export Terminal (WICET) at Gladstone. Stanmore Coal is a participant in the WICET Stage 2 expansion process and has acquired 7Mtpa of priority capacity rights in the terminal expansion.
Surat Basin coals are currently being exported in significant tonnages to the Asian utility market. The Range coal features good energy content, ability to produce low ash, low levels of trace element impurities by international standards, low sulphur and nitrogen contents and excellent burnout characteristics.
Favourable washability characteristics allow flexibility in choice of product ash with a likely product range of 10% - 14.4% ash.
Figure 6: Coal Quality
The PFS case is based on maximising energy recovery from the resource by bypassing as much coal as possible and washing the remainder to an ash content of 13.0% (air dried). This leads to a product ash of 14.4% (air dried) as shown in the table above. The optimal ash and energy content for the deposit will be determined in the BankableFeasibility Study in conjunction with further marketing analysis.
The introduction of bypass coal which avoids the wash plant also provides a beneficial lowering of lower total moisture content in the product coal.
Further Optimisation Potential
A number of areas were identified for further investigation with the potential to further improve the project economics. These include:
- Further refinement of the mining method and fleet to maximise the use of cheaper overburden dozer push
- Revisiting the optimal product ash and bypass coal configuration. The Range coal has the potential to be washed to an ash level of between 10% and 17% at varying yields. Additional market analysis is planned to identify the optimal product ash specifications
- Potential for in pit crushing and conveying systems for waste transport and Wirtgen surface miner to remove coal and thin interburden materials
- Potential for shared infrastructure costs on the overland conveyor and at the rail loadout area
- Possible cost savings and washplant efficiency improvements from new technologies such as the use of reflux classifiers
- Successful drilling to the west of the current proposed pit has the potential to extend the resource base and mine life
These are being investigated during the BankableFeasibility Study which commenced in early 2012 and is near completion.