NOVA SCOTIA - XSTRATA COAL DONKIN (75%) and Halifax's ERDENE GOLD (25%) have completed a preliminary assessment study for the underground Donkin coal mine about 20 km east of Sydney. Cape Breton Development Corp. began development of the Donkin mine in the late-1980s, and the two slopes (access tunnels) remain usable.
The proposed mine would use a longwall face mining system and three continuous miner sections to develop the panels. The capital budget required to bring the mine to production is estimated to be $313 million, including a 10% supply cost contingency, and labour costs have had a 15% contingency applied. The study is based on a projected mine life of 30-plus years, over which time approximately 109 million tonnes of run-of-mine coal would be produced. The initial target market for this product will be domestic and export thermal coal power generation.
Total cash costs for coal production, transportation to the port and loading into the ocean-going vessels, and royalties, are estimated to be $23.13/tonne. Under base case assumptions, the project provides a net present value of $195 million or a 16% internal rate of return on an after-tax basis.
The Donkin block contains an indicated resource of 101 million tonnes and an inferred resource of 115 million tonnes. The coal is classified as high volatile A bituminous, averaging 4.5% S and 12% ash.
The start date for production depends on many factors including the determination of the methane liberation rate and the design of the ventilation system, according to Erdene (www.Erdene.com). A few photos of the Donkin project are posted on Erdene's website.
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