Debiensko could be low-cost producer – Prairie

PERTH (miningweekly.com) – A scoping study into the Debiensko coking coal project, in Poland, has demonstrated its potential to become a globally significant producer, adding some 2.6-million tonnes a year of hard coking coal product to the global market.

ASX-listed Prairie Mining said on Thursday that, with a mine life of up to 26 years, based on the Joint Ore Reserves Committee-compliant resource of 301-million tonnes, the project could generate yearly earnings before interest, taxes, depreciation and amortisation of $282-million, generating cumulative free cash flow of some $5.4-billion.

Despite a capital cost of $504-million, the Debiensko project could potentially be among the lowest-cost suppliers of hard coking coal, with cash costs of around $47/t. Leveraging off existing infrastructure at the mine site could also result in a capital intensity of $197/t of yearly saleable production capacity, compared with the industry average of over $401/t for global hard coking coal mines developed in the last decade.

“The scoping study results confirm Debiensko’s potential as a Tier 1 premium hard coking coal asset by virtue of the significant potential production scale and resource size, exceptionally low estimated cash costs and low capital intensity of the mine,” said Prairie CEO Ben Stoikovich.

“The study focused on the near-term development of highly profitable coal seams at low capital and operating costs. The mine has the potential to deliver 2.6-million tonnes a year of premium quality hard coking coal at $47/t, placing it near the bottom of the global cost curve. Blessed with the presence of existing rail, road, power, water and other mine infrastructure, the project potentially has one of the lowest capital intensities for new hard coking coal mines, and is fully permitted for development.”

Stoikovich added that Prairie’s initial marketing studies have also indicated that the Debiensko coal will likely be in strong demand in Central Europe, given the highly favourable regional supply/demand dynamics.

According to the scoping study, Prairie was hoping to start construction of Debiensko in 2019, with production ramp-up slated to start in 2023.