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Paringa study estimates US$655M NPV for Buck Creek coal complex

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Paringa study estimates US$655M NPV for Buck Creek coal complex

Paringa Resources Ltd.'s expanded bankable feasibility study for the Buck Creek coal mining complex in Kentucky confirmed a net present value, discounted at 8%, of US$655 million after incorporating a second coal seam at the Poplar Grove mine.

The expanded BFS included the Western Kentucky No. 9 coal seam to the Poplar Grove mine, which is estimated to cost an additional US$5 million of capital expenditure, for total initial CapEx of US$44.7 million.

As a result of the second coal seam, Poplar Grove's net present value, discounted at 8%, surged 80% to US$310 million, while mine production jumped 56% to 2.8 million tonnes per annum, the company said March 28.

The estimated average annual EBITDA from the mine now stands at US$67 million, a 72% increase over the bankable feasibility study.

The internal rate of return is pegged at 42%, with a 25-year mine life.

The combined average annual EBITDA is estimated at US$163 million, while the combined annual production is estimated at 6.6 million tonnes per annum for the coal complex.

Paringa said it will now finalize funding negotiations for the development of the Poplar Grove mine starting in the middle of the year, with first coal due mid-2018.

The Buck Creek mining complex includes the Poplar Grove mine and the Cypress mine.