Stanmore Coal has lodged a mining lease application for the Isaac Plains East (IPE) deposit adjacent to its current Isaac Plains coal mine, in a move that could significantly increase mine life and improve average strip ratios and quality.
Isaac Plains East was formerly known as the Wotonga coal deposit which Stanmore purchased from Peabody for around $7 million just one month before buying the mothballed Isaac Plains mine from Vale and Sumitomo in August last year.
According to Stanmore, the 8.3 million tonne IPE reserve (if approved) will increase the mine life of their Isaac Plains operations from three to 10 years at current production and deliver a suite of other improvements.
“The Coking coal on the adjacent tenures has improved coking properties and coking fraction compared to the existing Isaac Plains operation,” Stanmore said.
“It [Isaac Plains East] has a low strip ratio starting at less than 6:1 on average over the first four years, and 10:1 after that which is lower than Isaac Plains.”
The most attractive thing about IPE for Stanmore is that it can be exploited with very little new infrastructure.
Under current plans, IPE coal will be hauled three kilometres to be processed through the current Isaac Plains processing and transport infrastructure.
Meanwhile, Stanmore is exploring ways to increase output immediately at the Isaac Plains operation.
The recent introduction of Highwall underground mining adjacent to the main open cut operations is expected to increase total coal production this financial year by around 220,000 tonnes.
They are also looking at the feasibility of a board and Pillar underground operation which they believe could unlock underground measured resources of 20 million tonnes on the eastern side of the existing mining lease.
Current operations employ around 150 people.
The Stanmore purchase of Isaac Plains for $1 (plus millions of dollars of mine environmental and startup liabilities) is shaping up to be the deal of the decade, given that in 2011, Japan-based Sumitomo Corporation paid $430 million for a half share in the Isaac Plains mine.
Further, coal prices have more than doubled since that time pushing their share price up from $0.20 to nearly at $0.75 today.
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