TIDMORCP
RNS Number : 8046W
Oracle Coalfields PLC
06 February 2012
6 February 2012
Oracle Coalfields PLC
("Oracle" or the "Company")
Technical Feasibility Study
Oracle Coalfields PLC (AIM:ORCP), the coal explorer and
developer of a lignite mineral property located in the
south-eastern desert of Sindh Province, Pakistan, today announces
the results of the technical feasibility study ("FS") on Block VI
of the Thar Coalfield.
The exploration licence for Block VI (NO.DMD/S/Ex-L-Coal
(11)/10/2914) with an area of 66.1km(2) ("Licence Area") is held by
Oracle's 80 per cent owned subsidiary, Sindh Carbon Energy Limited
("Sindh Carbon"), a private company incorporated in Sindh Province,
Pakistan. On 2November 2011 Sindh Carbon submitted an application
for the conversion of the current exploration licence to a mining
licence.
Highlights from the FS:
-- Within the Licence Area there are Mineral Resources (reported
in accordance with the terms and definitions of the JORC Code -
defined below) in the mining area (approximately 20 square
kilometres) of 529 millions of wet tonnes (Mwt) with gross
calorific value (CV) of 3,182k calories per wet kilogramme (wkg),
with ash content at 5.89 per cent and Sulphur at 0.91 per cent.
-- Probable Coal Reserves (Phase 1 of Mining Area) of 113Mwt
with gross CV 2,831kcal/wkg, Ash 11.50 per cent and Sulphur 0.79
per cent with a strip ratio of 8.54bcm waste (Bank Cubic Metre):1wt
lignite.
-- Total capital expenditure for open cast mine development is
estimated at US$610m (including US$224m for mining equipment) for
5Mwt per annum of lignite production.
-- Total cash cost of production of US$42.21 per wet tonne.
-- Confirmed product quality suitable for power generation.
-- 23 year mine life.
Shahrukh Khan, CEO of Oracle, said:
"This is another important step for Oracle as we look to provide
a sustainable source of energy to Pakistan and bring its first
large scale open-pit coal mine into production. The FS indicates
the technical and economic viability of the mining project.
"Further work is continuing to refine the overall project
economics, specifically in respect of off-take agreements with
respect to the Power Plant (defined below); and the mining
contractor opportunities, prior to making any definitive
announcements on the overall economics. The Government of Sindh in
recent published announcements recognises a Project IRR in excess
of 20 per cent assuming completion of certain financing
milestones.
"The Board looks forward to progressing the technical
feasibility study to bankable standard ("BFS") in 2012, when we
will also be seeking direct funding for the mining project."
The FS is targeting the development of a lignite mining
operation (the "Lignite Mining Project", "LMP") to supply a
mine-site power station with an annual mine production target of
5Mwt (47.80 per cent moisture) of lignite at an overall stripping
ratio of 8.54bcm to one wet tonne lignite and a total mine-site
production cost of US$42.21 per wet tonne of lignite (47.80per cent
moisture) delivered over an expected mine life of 23 years.
The total mine site capital expenditure for construction and
development to full production is US$610m with an expected
construction period of 27 months. The current FS defines sufficient
coal reserves to support a 23 year mine life, defined as Phase
1.
The FS was compiled by SRK Consulting (UK) Limited ("SRK") with
certain of the underlying technical disciplines (Geology; Mineral
Resources and Ore Reserves; Mining Engineering; Hydrogeology - mine
site; Geochemistry; and Financial Modelling) authored by SRK
directly and others, whilst reviewed by SRK, authored as follows:
Environmental and Social Studies by Wardell Armstrong LLP and
Hagler Bailey Pakistan (Pvt) Limited; Hydrogeology- semi regional
ground water by RPS Aqua Terra (Pty) Limited; Infrastructure by WSP
Group plc.
Where appropriate, local consultants were also employed to
complete certain tasks, under the supervision of the above named
consultancies. The specific scope of the FS was limited to the mine
site and specifically excludes any consideration for the
development, construction and operation of the Power Generation
Plant Project ("Power Plant").
Further work is required to progress this Feasibility Study to a
bankable standard ("BFS"). The environmental work completed to date
has targeted compliance with both local regulatory requirements and
international standards (specifically: Equator Principles, IFC
Performance Standards, World Bank EHS Guidelines and ICMM
guidelines).
Although further work is required, the economic viability of the
LMP is dependent upon various assumptions in respect of the Power
Plant which are not yet supported by a BFS.
The reporting standard adopted for the reporting of the Mineral
Resource and Ore Reserve Statements for the LMP is that defined by
the terms and definitions given in "The 2004 Australasian Code for
Reporting of Exploration Results, Mineral Resources and Ore
Reserves (the "JORC Code") as published by the Joint Ore Reserves
Committee of the Australasian Institute of Mining and Metallurgy,
Australian Institute of Geoscientists and Minerals Council of
Australia". The JORC Code is an internationally recognised
reporting code as defined by the Combined Reserves International
Reporting Standards Committee.
For further information, please follow this link to view the
mining area at:
http://www.oraclecoalfields.com/graphic.pdf
The total Mineral Resource of the mining area reported by SRK to
Oracle is 529Mwt lignite which comprises total Measured and
Indicated Mineral Resources of 459Mwt lignite and Inferred Mineral
Resources of 70Mwt lignite. Individual qualities for each
classification are included in the table below where the following
also apply:
1. Measured and Indicated Mineral Resources are inclusive of
those Mineral Resources modified to produce Coal Reserves, i.e.
they are reported on an 'inclusive basis'; and
2. Mineral Resources are deemed to be potentially economic by
open-pit methods and are constrained within an optimised shell
corresponding to a long term price ("LTP") assumption of US$60 per
wet tonne.
Mineral Resource Statement 03 January 2012
Mineral Resources Tonnage Moisture RD Gross CV Ash Sulphur
(M (wt) ) (%) (wg/cm(3) (kcal/wkg) (%) (%)
)
------------------ --------- -------- --------- ---------- ---- -------
Measured 151 48.00 1.15 3,025 5.10 0.60
Indicated 308 45.30 1.15 3,257 5.60 0.91
Subtotal 459 46.19 1.15 3,181 5.44 0.81
------------------ --------- -------- --------- ---------- ---- -------
Inferred 70 45.40 1.15 3,193 8.90 1.58
Total 529 46.08 1.15 3,182 5.89 0.91
------------------ --------- -------- --------- ---------- ---- -------
The total Coal Reserves reported as at 03 January 2012 within
Phase 1 are 113Mwt, all of which are classified as Probable Coal
Reserves. This comprises both Measured (80 per cent) and Indicated
(20 per cent) Mineral Resources modified to Coal Reserves reporting
within an engineered pit design based on a LTP assumption of
US$37.50Mwt of lignite. The classification of all Coal Reserves as
Probable is a direct consequence of assumptions regarding certain
of the modifying factors and sales revenue. Furthermore, the
declaration of Coal Reserves assumes the successful granting of a
mining licence.
The assumed modifying factors include lignite weighted average
(tonnage basis): mining losses of 7 per cent. (ranging from 3 per
cent to 26 per cent); dilution of 6 per cent (ranging from 3 per
cent to 29 per cent); and dilutant quality 100 per cent Ash.
Phase 1 Coal Reserve Statement 03 January 2012
Coal Reserves Tonnage Moisture RD Gross CV Ash Sulphur
(M (wt) ) (%) (wg/cm(3) (kcal/wkg) (%) (%)
)
-------------- --------- -------- --------- ---------- ----- -------
Proved - - - - - -
Probable 113 47.80 1.18 2,831 11.50 0.79
Total 113 47.80 1.18 2,831 11.50 0.79
============== ========= ======== ========= ========== ===== =======
The Competent Person who assumes responsibility for reporting of
the mineral resources is Mr Paul Bright, CEng, MIMMM, and BSc, who
is an employee of SRK. He is a Member of the Institute of
Materials, Metals and Mining ("IMMM") which is a Recognised
Overseas Professional Organisation ("ROPO") within the meaning of
the JORC Code. Mr Paul Bright is a coal geologist with over 30
years' experience in the coal mining industry and has been involved
in the reporting of mineral resources on various properties
internationally during the past five years.
The Competent Person who assumes responsibility for reporting of
the coal reserves is Mr Vince Osborne, RPEQ (Aus), MAuSIMM, BSc,
who is an employee of SRK. He is a Member of the Australian
Institute of Mining and Metallurgy ("AuSIMM") which is a ROPO. Mr
Vince Osborne is a mining engineer with over 25 years' experience
in the coal mining industry and has been involved in the reporting
of coal reserves on various properties internationally during the
past five years.
Both Mr Bright and Mr Osborne have reviewed this announcement
and have consented to its publication.
Further work
-- Completion of negotiations with an international mining contractor.
-- Finalisation of BFS including further studies to refine the following areas: geochemistry; hydrogeology; operating expenditure and capital expenditure updates; and power generation off-take agreements.
-- Completion of Environmental and Social Impact Assessment
("ESIA") in accordance with international standards.
-- Securing financial support for the engineering, procurement,
construction and completion of the Lignite Mining Project.
-- Assessment of opportunities for securing supplementary
off-take agreements with the cement industry in Pakistan.
-- Finalisation of mine site construction timeline following
Completion of BFS and ESIA for the Power Plant.
There will be additional information available on the company
website. This can be found at:
http://www.oraclecoalfields.com
For further information contact:
Oracle Coalfields PLC Telephone: +44 (0) 207 317 4050
Shahrukh Khan, CEO E-mail:s.khan@oraclecoalfields.com
Website: www.oraclecoalfields.com
----------------------------------- ------------------------------------
Novus Capital Markets Telephone: +44 (0) 207 107 1881
Nicholas Lee, Charles Goodfellow
----------------------------------- ------------------------------------
Blythe Weigh Communications Telephone: 0207 138 3204
Tim Blythe +44(0) 7816 924 626
Matthew Neal +44 (0) 7917 800 011
----------------------------------- ------------------------------------
Libertas Capital Corporate Finance Telephone: +44 (0) 207 569 9650
Limited
Sandy Jamieson , Neil Pidgeon
----------------------------------- ------------------------------------
- Ends -
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