NEW YORK, Oct. 18, 2015 /PRNewswire/ --
HIGHLIGHTS:
- Paringa has executed its "cornerstone" coal sales agreement
with LG&E and KU, two of the largest fuel buyers within the
Company's initial target Ohio River Market
- The coal sales agreement is for the Buck Creek No.1 Mine's
11,200 Btu/lb coal specification and will be sold at the proposed
Green River barge load-out
facility on an F.O.B. Barge
basis
- Key fixed coal sales and fixed pricing terms of the coal
sales agreement are summarised as follows:
Table 1: Summary
of Key Terms (with 11,800 btu/lb Equivalent Calculation and
Buck Creek No.1 Operating Costs)
|
Year
|
Contracted
Production
|
Fixed Contract
Price
(FOB Barge; 11,200
btu/lb)
|
11,800 btu/lb
Equivalent
Calculation1 (FOB Barge)
|
2018
|
750,000
tons
|
US$44.50 per
ton
|
US$46.88 per
ton
|
2019
|
1,000,000
tons
|
US$45.50
|
US$47.94
|
2020
|
1,000,000
tons
|
US$46.30
|
US$48.78
|
2021
|
1,000,000
tons
|
US$47.25
|
US$49.78
|
2022
|
1,000,000
tons
|
US$48.20
|
US$50.78
|
|
Buck Creek No.1 Mine
"All-in" Operating Costs per ton2
|
US$30.19 per
ton
|
(1): Calculation of
the 11,800 btu/lb equivalent price is = ((11,800 / 11,200) x
price)
|
(2): Represents the
average "all-in" operating costs per ton during the steady-state
production as per the Pre-Feasibility Study released March
2015
|
- The coal sales agreement is a 7-year contract covering an
initial 2-year construction period (2016 to 2017) and a 5-year
production period (2018 to 2022)
- The coal sales agreement requires Paringa to meet certain
construction milestones in developing the Buck Creek No.1
Mine
- LG&E and KU are subsidiaries of PPL Corporation,
a diversified US energy company that has a market capitalisation of
approximately US$22.2 billion (NYSE:
PPL)
- Execution of the cornerstone coal sales agreement will
enable Paringa to facilitate final negotiations with financiers to
develop the low-capex Buck Creek No.1 Mine
Paringa's President and Chief Executive Officer, Mr.
David Gay, said: "I am very
excited that Paringa has executed its cornerstone coal sales
agreement with LG&E and KU. The contract is the culmination of
over a year of due diligence, negotiations, documentation and
approvals on both sides. We are very proud to be contracting with
LG&E and KU and we will look forward to contracting additional
coal sales as we move towards production."
Paringa Resources Limited ("Paringa" or "Company")
(ASX: PNL; OTCQX: PNGZF) is pleased to advise that it has executed
its "cornerstone" coal sales agreement with Louisville Gas and
Electric Company and Kentucky Utilities Company ("LG&E and
KU") for future coal sales from the proposed Buck Creek No.1
Mine, totaling US$220 million of
contracted sales.
Based on feedback from Paringa's potential "tier-1" customers
within the Ohio River Market, the Buck Creek No.1 Mine's Coal
Handling and Preparation Plant was redesigned as part of the
Pre-Feasibility Study ("PFS") released to the ASX in
March 2015, to produce both a
fully-washed and a blended product. It is estimated that 30% of
total sales from the Buck Creek No.1 Mine will be a fully washed
11,800 btu/lb product and 70% of total sales will be a 11,200
btu/lb product.
Paringa is expected to begin production at the Buck Creek No.1
Mine in 2018, reaching full production of 3.8mtpa by approximately
2020. Under the coal sales agreement, Paringa is contracted to
deliver a total of 4.75 million tons over a 5-year period of its
11,200 btu/lb product, with 750,000 tons to be delivered in 2018
and 1,000,000 tons to be delivered in each year from 2019 to
2022.
The Buck Creek No.1 Mine's direct barge access to the Green and
Ohio River systems provides a significant transportation advantage.
The LG&E and KU coal sales agreement calls for fixed sales
prices based on a Free-on-Board ("F.O.B.") Buck Creek No.1
Green River Barge Price", which is equivalent to a price for
selling coal at the end of the Buck Creek No.1 Mine's conveyor belt
at the Green River barge load-out facility.
The contracted fixed coal sales prices for Paringa's 11,200
btu/lb coal spec begins at US$44.50
per ton in 2018, escalating to US$48.20 per ton in 2022. By adjusting for
heating content, the equivalent 11,800 btu/lb coal price implied
under this coal sales agreement is US$46.88 for 2018, increasing to US$50.78 by 2022.
Provided below is a comparison of the five year (2018 to 2022)
weighted average 11,200 btu/lb LG&E and KU contract prices to
the PFS sales price assumptions which were adjusted for Paringa's
blended 11,200 btu/lb coal product in the PFS:
|
Table 2:
Comparison of LG&E and KU, and PFS Model Weighted Average
Contract Prices
|
Year
|
LG&E and KU
Weighted Average Contract Price
(FOB Barge; 11,200
btu/lb)
|
PFS Model Weighted
Average Price
(FOB Barge; 11,200
btu/lb)
|
Difference
|
2018 -
2022
|
US$46.45 per
ton
|
US$47.40 per
ton
|
(2%)
|
|
The LG&E and KU agreement specifies coal specifications for
deliveries of Buck Creek No.1 Mine's coal on an "as received"
basis:
|
Table 3: Summary
of LG&E and KU Contract Coal Specifications
|
Specifications
|
Guaranteed Monthly
Weighted Average
|
Heating Content
(Btu/lb)
|
min. 11,200
Btu/lb
|
Moisture
|
max. 10.00
lbs/mmbtu
|
Ash
|
max. 11.00
lbs/mmbtu
|
Chlorine
|
max. 0.18
lbs/mmbtu
|
|
The LG&E and KU agreement includes standard project
development milestones that are in line with the proposed Buck
Creek No.1 Mine construction program. During this construction
period, LG&E and KU will progressively monitor Paringa's
performance in meeting these milestones. If the Company fails to
achieve the relevant milestones, then LG&E and KU may terminate
the agreement and the Company shall have no further
obligations.
About LG&E and KU
LG&E and KU are subsidiaries of the PPL Corporation (NYSE:
PPL) family of companies and are regulated utilities that serve a
total of 1.2 million customers. LG&E and KU have consistently
ranked among the best companies for customer service in
the United States. LG&E and KU
own three power plants within Paringa's initial target Ohio River
Market (Trimble County, Ghent and
Mill Creek) that are almost exclusively supplied by the Illinois
Basin.
PPL Corporation is one of the largest investor-owned companies
in the US utility sector. PPL Corporation has a Moody's/S&P
investment grade credit rating, market capitalization of
US$22.2 billion, US$11.5 billion in 2014 annual revenue and 10.5
million utility customers in the US and UK.
BUCK CREEK MINING COMPLEX
The Buck Creek Mining Complex is located in the Western Kentucky region of the Illinois Coal
Basin ("ILB") which is one of the most prolific coal
producing regions in the United
States. Paringa controls over 34,556 gross acres (~13,988
ha) of coal leases within an area of interest of approximately
72,000 acres (~28,000 ha). The Buck Creek Mining Complex is one of
the few remaining contiguous high quality thermal coal projects
within the Western Kentucky No. 9 ("WK No. 9") seam that is
not controlled by one of the major United
States coal companies. It offers one of the highest quality,
highest heating value products in the ILB. The WK No. 9 is now the
second largest producer of coal in the
United States by coal seam.
The Buck Creek Mining Complex has a JORC Measured and Indicated
Coal Resource Estimate of 211 million tons (~192 million tonnes) of
high quality thermal coal. The Project's Marketable Ore Reserve is
classified as a Proven and Probable Ore Reserve Estimate, of which
16.4 million tons (or 26 percent) is considered proven and 46.3
million tons (or 74 percent) is considered probable.
|
Buck Creek Mining
Complex – Coal Resource Estimate
|
CRE Tonnage
(Mt)
|
Coal Quality (+4%
Eq. Moisture)
|
Measured
|
Indicated
|
Total Measured
& Indicated
|
Inferred
|
Total
|
Calorific
Value
|
Ash
|
Yield
|
57.7
|
153.5
|
211.2
|
5.3
|
216.5
|
11,855 Btu/lb
(6,583
Kcal/kg)
|
8.35%
|
92.9%
|
|
Buck Creek No.1
Mine Maiden Ore Reserve Estimate
|
Recoverable Coal
Reserve (Mt)
|
Product
Yield
|
Marketable Coal
Reserve (Mt)
|
Proven
|
Probable
|
Total
|
%
|
Proven
|
Probable
|
Total
|
22.25
|
62.91
|
85.16
|
73.54%
|
16.36
|
46.27
|
62.63
|
|
The Buck Creek Mining Complex is located adjacent to the Green
River which provides year-round linkage to the Ohio and Mississippi
rivers systems. These systems feed domestic coal-fired power plants
and coastal export coal terminals in the Gulf of Mexico.
Forward Looking Statements
This announcement may
include forward-looking statements. These forward-looking
statements are based on Paringa's expectations and beliefs
concerning future events. Forward looking statements are
necessarily subject to risks, uncertainties and other factors, many
of which are outside the control of Paringa, which could cause
actual results to differ materially from such statements. Paringa
makes no undertaking to subsequently update or revise the
forward-looking statements made in this announcement, to reflect
the circumstances or events after the date of that
announcement.
Competent Persons Statements
The information in
this announcement that relates to Exploration Results, Coal
Resources, Coal Reserves, Mining, Coal Preparation, Infrastructure,
Production Targets and Cost Estimation was extracted from Paringa's
ASX announcements dated 17 March 2015
entitled 'Paringa Delivers Exceptional Pre-Feasibility Study at the
Buck Creek No.1 Mine' and 25 February
2015 entitled 'Substantial 54% Increase in Measured and
Indicated Coal Resources to 211 Million Tons' which are available
to view on the Company's website at
www.paringaresources.com.au.
The information in the original ASX announcements that related
to Exploration Results and Coal Resources is based on, and fairly
represents, information compiled or reviewed by Mr. Kirt W. Suehs, a Competent Person who is a
Member of The American Institute of Professional Geologists. Mr.
Suehs is employed by Cardno. Mr. Suehs has sufficient experience
that is relevant to the style of mineralization and type of deposit
under consideration and to the activity being undertaken to qualify
as a Competent Person as defined in the 2012 Edition of the
'Australasian Code for Reporting of Exploration Results, Mineral
Resources and Ore Reserves' and to qualify as a Qualified Person as
defined in the 2011 Edition of the National Instrument 43-101 and
Canadian Institute of Mining's Definition Standards on Mineral
Reserves and Mineral Resources.
The information in the original ASX announcements that related
to Coal Reserves, Mining, Coal Preparation, Infrastructure,
Production Targets and Cost Estimation is based on, and fairly
represents, information compiled or reviewed by Messrs.
Justin S. Douthat and Gerard J. Enigk, both of whom are Competent
Persons and are Registered Members of the Society for Mining,
Metallurgy & Exploration. Messrs. Douthat and Enigk are
employed by Cardno. Messrs. Douthat, and Enigk have sufficient
experience that is relevant to the style of mineralization and type
of deposit under consideration and to the activity being undertaken
to qualify as Competent Persons as defined in the 2012 Edition of
the 'Australasian Code for Reporting of Exploration Results,
Mineral Resources and Ore Reserves' and to qualify as Qualified
Persons as defined in the 2011 Edition of the National Instrument
43-101 and Canadian Institute of Mining's Definition Standards on
Mineral Reserves and Mineral Resources.
Paringa confirms that: a) it is not aware of any new information
or data that materially affects the information included in the
original ASX announcements; b) all material assumptions and
technical parameters underpinning the Coal Resource, Coal Reserve,
Production Target, and related forecast financial information
derived from the Production Target included in the original ASX
announcements continue to apply and have not materially changed;
and c) the form and context in which the relevant Competent
Persons' findings are presented in this presentation have not been
materially modified from the original ASX announcements.
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/paringa-contracts-future-coal-sales-totaling-us220-million-with-a-major-utility-300161661.html
SOURCE Paringa Resources Limited