Straits completes scoping study on Sebuku coal extension area
Estimated capital cost at $860 million
Friday, December 19 2008 - 04:04 AM WIB
The area is the extension area of the firm's Sebuku concession, for which the firm recently got a permit to develop.
Initial mine studies indicate the coal has a stripping ratio of 7:1 and the product will have similar quality with that of the current Sebuku coal. While the average thickness of the main 197 Seam over the entire resource area is 8 meters, the total coal sequence averages 18 meters, the company said.
The scoping study was conducted whilst the drilling program was undertaken and a study was made to review the potential engineering problems and mining methods for this area. The study envisages a significant stand-alone mining operation with a build up in coal production to a capacity of 20 million tons per annum and a 20-year mine life.
Mining the Western Leases presents technical challenges as it lies in shallow water in the Sebuku Strait, the firm said, while noting the mining activities would take place in ?mining cells? behind a series of constructed bunds.
"Engineered bunds to enable the extraction of submarine resources are technically well understood, not unique and are widely implemented globally. Bund construction time is expected to be less than twelve months for each mining cell, with material for bund construction sourced from existing mining operations," it said.
Support infrastructure would include a coal wash facility (over and above the current two washplants that will provide Straits Asia with 8Mt of capacity in 2009); a coal fired thermal power station to reduce costs; overland conveyors; and a marine conveyor to a dedicated offshore ship loading facility. Several approaches to the facility configuration are being considered.
According to the company, the estimated capital cost is US$860 million over the mine life. Site cash operating costs are forecast at U$25/ton (excluding royalties). Using a long term sales price of $80/ton the Net Present Value of the cash flow (pre-tax) is $2.7 billion.
Given the resource size, the capital cost is considered to be very competitive relative to Indonesian and international benchmarks. The study includes a general contingency of $97 million and has identified areas for consideration that might result in reductions in capital costs.
SAR has over the last few years conducted an ongoing exploration program on its Western Leases- which has to date resulted in a JORC compliant resource of 296 million tons (denny)