Acacia's South African coal project proves promising

PERTH (miningweekly.com) – Australian junior Acacia Coal has completed a prefeasibility study (PFS) for the Riversdale anthracite colliery, in South Africa, which estimates that the project will require a capital investment of A$24-million.

The project, which Rio Tinto sold to Acacia Coal last year, is expected to produce 438 000 t/y of low impurity anthracite coal and will generate free operating cash flow of A$14.5-million over an eight-year mine life.

The project is expected to have a net present value of A$73-million and an internal rate of return of 53%, with the capital pay-back period estimated at just under three years.

Acacia MD Hugh Callaghan said on Tuesday that a combination of the extremely high-quality nature of the Riversdale coal and the declining inventory of metallurgical coal in South Africa, were at the heart of the project’s strong outlook.

“The PFS shows that the Riversdale colliery project ticks every box, ranging from a premium-quality product through to low cost and strong margins. The project is ideally placed to capitalise on the strong supply-demand fundamentals in the South African premium metallurgical coal market.”

Acacia will now submit an integrated water use licence application in May, and based on discussions to date, expects to receive its final outstanding regulatory approval by mid-2018.

A feasibility study into the project will start in July.