Katingan Ria coal maiden reserves established
Friday, March 8 2013 - 02:45 AM WIB
ASX-listed Realm Resources Ltd. announced the maiden JORC compliant reserves of 29Mt at its Katingan Ria project following an independent estimate completed by Xenith Consulting Pty Ltd.
Katingan Ria, which is located in Central Kalimantan Indonesia, is shaping up as a simple, open-cut operation that will supply low ash and low sulphur coal ideally suited for modern Indian and Chinese power generation, the company said in a statement obtained Friday.
The reserve estimates are based on previously reported JORC compliant coal resources of 89Mt, together with realistic mining, metallurgical, economic, marketing and royalty assumptions.
?We are pleased to achieve this important project milestone, with sufficient reserves now defined for well over ten years of operation. This reserve estimate paves the way for possible financing and development following the expected receipt of the final Pinjam Pakai (forestry permit) operations permit in second half of 2013,? said Chairman Richard Rossiter in the statement.
The statement provides further details about the Katingan Rian coal project as follows.
The Katingan Ria coal project is located near the town of Tumbang Samba in Central Kalimantan. The project is planned as a 2.5Mt pa open cut mine. The planned operation consists of an open cut haul back mining method using hydraulic loaders and rear dump trucks to dump both inpit and expit. Coal is transported from the pit by 60 t road trucks approximately 45 km to a stockpiling and barge loading facility on the Katingan River. Barges will then transport coal 435 km from the stockpile area to the river mouth for transhipment into coal ships for delivery to market.
Coal is planned to be sold ?unwashed?, meaning there is no metallurgical treatment required to achieve a saleable product. The coal is expected to be predominately sold as a low ash and low sulphur coal ideally suited for modern Indian and Chinese power generation.
Realm recently published a resource upgrade following the completion of the phase 3 drilling program. A JORC compliant coal resources of 89 Mt was defined, of which 6 Mt were classified as Measured, 44 Mt are classed as Indicated with an additional 39 Mt of the deposit being classified as Inferred.
The coal reserves have been estimated using the same geological model as used in the February 2013 resource statement and has been undertaken in compliance with the requirements of the reporting guidelines of the 2004 Joint Ore Reserves Committee of The Australasian Institute of Mining and Metallurgy, Australasian Institute of Geoscientists and Minerals Council of Australia (?JORC Code?).
Coal reserves have been estimated by applying realistic mining, metallurgical, economic, marketing, legal, environmental, social and government factors to the coal resources. The mining factors (such as recovery and dilution) have been defined from the proposed open cut mining method. The Pit Optimization study, which delineated the Katingan Ria life of mine (LOM) pit (used in this Reserves Statement), was based on the area of the deposit that was economical to mine at a reasonably low product coal sales price. No metallurgical factors are applicable as the ROM coal is sold as a raw coal without processing.
In addition, due to the seasonality of the Katingan River , coal mining and barging has been limited to approximately 9 months in the year with campaign style barging planned to take advantage of the periods when river depths are fully navigable.
All the coal reserves are classified based on the level of detail completed in the mine planning and also the level of confidence in the resources. Coal resources are reported inclusive of coal reserves (that is, coal reserves are not additional to coal resources).
The coal reserves are based on a long - term coal price of $52/t for Katingan Ria coal (note: based on an internal Market Study by Salva Resources in November 2012, this equates to a long term Hunter Valley coal price of around $104/t). Based on the current spot price (US$41 .50/t FOB Kalimantan 4,200 kcal/kg GAR coal, March 5th 2013), the project is considered marginal with operating profits only occurring in the initial low strip ratio years and as such economic reserves do not exist. Coal price is therefore a major risk to the project.
At Katingan Ria, all coal reserves have been classified as probable due to the coal price and barging risks. The following tables show the total estimated open cut coal reserves and the reserves by seam for open cut reserves.
The total coal reserve at Katingan Ria is estimated as 29 Mt of probable reserve of which 26.4 Mt is attributed to the Main Seam. The weighted average Main seam calorific value and ash is 4,269 kcal/kg (gar) and 8.9% (gar) respectively. The B seam has slightly lower quality coal with 13.3% (gar) ash and 4,127 kcal/kg (gar) energy.
Major risks to the coal reserve estimate are a reduction in the thermal coal price and challenges associated with transporting the coal to market, namely barging on the Katingan River.
Editing by Reiner Simanjuntak