Vickery South is a coking and export thermal coal project near Gunnedah. Coalworks has completed measured drilling and has identified a 58.5 Mt JORC compliant bituminous coal resource, includes 48Mt measured, 0.1Mt indicated and 10.4 inferred resource.
On 22 December 2010, Coalworks announced that its wholly owned subsdiary, Coalwokrs (Vickery South) Pty Ltd signed a joint venture agreement with ICRA Vickery Pty Ltd (ICRAV), a wholly owned subsidiary of the Japanese general trading company, ITOCHU Corporation, for the Vickery South Project.
The Joint Venture followed payment to Coalworks of the first tranche of $5 million by ICRAV for 29% of Exploration Licence 7407 (Vickery South). The Joint Venture provides for ICRAV to earn up to 49% by the completion of a bankable feasability study.
An off take and marketing agreement is envisaged where ITOCHU will purchase or arrange sale for the expected coking and thermal coal from the project. ITOCHU, whose turnover exceeded US$34 billion in 2008/9, has extensive experience in developing and investing in coal mines in Australia and marketing and selling coal.
Coalworks released in June 2011 its Vickery South prefeasibility study update prepared by their consultants (Minarco-MineConsult) to develop the Vickery South Coal Mine, coal handling and preparation plant and mine infrastructure. The PFS model produces a range of positive Net Present Values (NPV) of between A$159M - A$323M on an 8 - 10% discount rate with a production level of between 2Mtpa - 3Mtpa.
The key outcomes of the PFS are as follows:
- Open cut truck and shovel operation .
-3Mtpa of run of mine (ROM) coal has a 16 year mine life producing a total of 43.2Mt ROM coal which after washing at 83% yield would produce 30Mt of semi soft coking coal (SSCC) and 6.3Mt of thermal coal.
- Typical coal product quality: SSCC with a CSN greater than 4 and ash of less than 8.5% (air drited moisture of 3.5%) and product moisture of 12.6%, Export Thermal Coal - low ash (5,9% ad), high calorific value (7,424 kcal/kg (ad)
- Product coal to be conveyed to a rail load out between the mine site and rail line.
- Capital Cost of A$206 million up to 2016.
Coalworks is now proceeding with the next phase of its exploration and engineering activities for the bankable feasability study. On 11 November 2010, Coalworks announced that Coalworks (Vickery South) Pty Ltd a wholly owned subsidiary of Coalworks Limited has completed the purchase of the land on which the EL 7407 is located. The land, which exceeds 2,600 hectares, was acquired for $13.944 million will accommodate the Vickery South Coal Mine, coal handling, preparation plant and mine infrastructure.
ICRAV arranged funding for the purchase from National Australia Bank supported by a corporate guarantee from ICRAV.