Allegiance Coal Ltd.'s definitive feasibility study for its Tenas project outlined a posttax net present value, discounted at 8%, of A$260.5 million, a 47% internal rate of return and a 2.5-year payback period.
The company is developing the Tenas deposit as the first project at its Telkwa metallurgical coal joint venture in British Columbia, which also hosts the Goathorn and Telkwa North deposits.
The project is expected to produce 22.0 million tonnes of coal during its 22-year life with an average salable coal output of 750,000 tonnes per annum, according to a March 18 release.
Startup capital costs, excluding contingency, are estimated at US$36.2 million on a lease-finance basis and at US$54.3 million on an owner-finance basis. All-in free-on-board cash costs before interest and tax are estimated at an average of US$49.70 per tonne.
The study outlined an average revenue of A$121.3 million per annum and average EBITDA of A$63.7 million per year.
The Tenas deposit hosts 36.5 million tonnes of resources and 16.5 million tonnes of salable coal reserves.
The 100% project owner, Telkwa Coal Ltd., is held 95% by Allegiance and 5% by Itochu Corp.
Allegiance signed a binding deal with Itochu in November 2018 to establish a joint venture at Telkwa, with the latter to act as exclusive sales agent for all Telkwa coal.
Itochu will invest C$6.6 million in the first stage to secure a 20% interest in Telkwa Coal, subject to the Canadian subsidiary holding C$1.5 million in cash in the bank.