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Initial study values Colonial Coal's Gordon Creek project at US$690.5M

Colonial Coal International Corp. said Nov. 12 that a preliminary economic assessment for the Gordon Creek project, part of the larger Flatbed coal project in British Columbia, outlined a posttax net present value, discounted at 7.5%, of US$690.5 million, a 24.4% internal rate of return and a three-year payback period from the start of production.

The study assumed a weighted average coking coal price of US$164.80 per tonne and a premium PCI coal price of US$140.50 per tonne. Breakeven coal price is estimated at less than US$96.50 per tonne.

An inferred coal resource of 298 million tonnes, estimated in November 2017, was used as basis for the study.

The report is based on a conceptual underground operation that targets a 111.6 million run-of-mine tonnes resource, producing 57.4 million tonnes of coal over a 30-year mine life. Production range in full operation is projected between 1.6 million tonnes per annum to 2.6 Mtpa, and averaging approximately 1.9 Mtpa.

Pre-production CapEx is pegged at US$300 million, with sustaining CapEx coming in at US$406 million over the mine's life.

The Canada-listed explorer said that the preliminary economic assessment demonstrated positive results, which is worthy of continued exploration and development.