5.2 Study Status
The mine has been operating since 1998 and is a mature mine with established infrastructure and position in the market place. The Competent Person for Coal Reserves considers the current mine operation is be
technically achievable and commercially viable. He has visited the site and is aware of the status of the operations and issues associated with the mine. It is a complex site as there are a series of mined out pits and
rehabilitated areas to consider in the long term mine plan. With recent higher coal prices the previous pit limits have been extended. Underground options are being considered but are not included in this statement.
5.3 Cut-off Parameters and Pit Limits
A “breakeven strip ratio” was calculated using actual data from the mine. This estimated the breakeven strip ratio to be 22.4 bcm tonne. The average stripping ratio was 19.4 bcm tonne. Minex optimiser software was
used to generate a series of incremental pit shells. This is a three dimensional approach which provides a series of incremental pit shells where each increment is more expensive due to a combination of factors such as depth,
strip ratio and coal quality. At this stage, the optimiser was not constrained by confidence limits.
Results were examined and compared to a series of pit shells generated manually by Bayan. A total of over 40 pit shells were evaluated which extended over 10 of the 14 seams. These were cross checked for tonnes,
quality, strip ratio and confidence limits Coal Resource categories and a number of pit shells excluded due to the Inferred level of confidence. Any potential pit areas which had Inferred Coal Resources were excluded from
the estimate. This process started with 35 Mt ROM tonnes and after eliminating 9 Mt of lower confidence coal this gave a total of 26 Mt of Proved and Probable Open Cut Coal Reserves. The pit shells included in the Coal
Reserve estimates are as shown on Figure 6.
5.4 Mining Factors
The highwall slope applied is 45 degrees. Adjustments have been made to the coal quantity and quality based on historical practices. This includes:
‰ coal losses of nominally 50mm for the roof and floor based on historical practices, ‰ ash increased by 1.5; and
‰ calorific value decreased by 150 kcal from the in situ model.
5.5 Metallurgical Factors
The majority of coal is sold unwashed and has no metallurgical factors applied. A small amount of cleanup coal containing excess dilution is sent to a process plant to produce a clean washed product. The average
yield for this coal is 50. The process and maintenance costs for the wash plant are high compared to the low throughput. The notional margins on this otherwise wasted coal are also high and offset the high production cost.
This quantity has been excluded in the Coal Reserve estimate and can be considered as an upside.
5.6 Cost and Revenue Factors
Bayan provided a “data sheet” of unit costs relevant to GBP Block 2. MMC checked these for reasonableness and also used an in-house NPV based economic model to show the project and reserves are “economic”.
These unit rates were then used to calculate the cost to deliver coal to a ship. This allowed a break even strip ratio to be calculated and was also used to calibrate the optimiser software. The following points summarise
the cost and revenue factors used for the estimate: ‰ All costs are in US dollars.
‰ A benchmark coal price of US65 per tonne for coal of CV 6,322 kcalkg gar moisture was used for the estimates.
‰ Royalties of 13.5 of revenue less marketing, barge and shipping costs have been allowed. ‰ VAT of 10.
‰ A fuel price of 68 cents per litre was used for mining costs. ‰ A coal haulage cost of 11 cents per tonne kilometre.
‰ Allowances were made for crushing, stockpiling, barge loading and ship loading which totalled approximately 11.40 per tonne.
A-50
‰ Administration and marketing were 1.50 per tonne. ‰ Coal mining was a variable rate depending on depth.
‰ Waste mining was variable depending on depth and distance of haul.
5.7 Marketing and Product Specifications
A detailed market study had not been done. However, Bayan are well established in the market place and the current demand for thermal coal is high so MMC sees no problems in selling this coal.
5.8 Other Relevant Factors
There are a number of planning issues which may impact on the stated mining reserves. These include: ‰ ongoing exploration drilling and updates to the geological model,
‰ inclusion of additional pit survey into the geological model for active mining areas; and ‰ ongoing mine planning including underground opportunities; rehandling of some backfilled dumps to
allow access to lower seams; high wall mining and more detailed life of mine planning. These issues may cause the pit shell and mining quantities to change in future JORC statements.
5.9 Classification
Total Coal Resources are largely unchanged since the previous report with the exception of additional quantities in Seams 7 and 8 which have been extended down dip due to the availability of deeper drill data. Coal
in several blocks has been upgraded from Indicated to Measured category due to geophysical logging for more recent drillholes and the availability of pit survey data in currently active pits.
Coal Reserves have increased significantly due to revision of the mining limits for a number of pits due to increased coal prices and a proportion of Probable Coal Reserves has been upgraded to Proved category due to
the upgrade in Coal Resource category to Measured.
5.10 Audits and Reviews
The selected pit shells were cross referenced against mined out areas and also compared to the optimizer output. MMC technical staff had several sessions with Bayan technical staff to review data, pit shells and
confidence limits. MMC has previously prepared a Coal Resource and Reserve statements compliant with the JORC Code for this project dated 31
st
January 2008. There has been some additional drilling and pit shells have been extended to reflect a higher cut-off ratio and the additional information. Estimates have been modified to
allow for mining up to 31
st
March.
5.11 Discussion of Relative Accuracy and Confidence
There is a high level of confidence in the costs and infrastructure as it is an operating mine. There are some Coal Resource confidence issues which requires more drilling to resolve.
5.12 Results
Table 5.1 shows the total Coal Reserves and Tables 5.2 and 5.3 show the Proved and Probable Coal
Reserves by seam respectively.
Table 5.1—Total Open Cut Coal Reserves
Mt Ash
TS CV kcalkg
adb adb
gar
Proven . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4.2
6.6 0.9
7,054 Probable . . . . . . . . . . . . . . . . . . . . . . . . . . . .
21.8 6.6
1.3 7,042
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26.0
6.6 1.2
7,044
Note: Estimate has been rounded to reflect accuracy. As received moisture is 7.8 A-51
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