Oracle announces details of Implementation Plan
04 September 2012
Oracle Coalfields PLC
("Oracle" or "The Company")
Oracle announces details of Implementation Plan for Thar Coalfield Project
Oracle Coalfields PLC (AIM: ORCP), the UK coal developer of a lignite mineral property located in the south-eastern desert of the Sindh Province, Pakistan, today releases details of its Implementation Plan ("The Plan") to demonstrate the capital and operating costs for the development of a lignite coal mine on Block VI of the Thar Coalfield to supply a 300MW power plant at the mine site. The Plan was prepared by Dargo Associates Limited, a leading UK based independent coal consultant.
Implementation Plan highlights
· Total investment to bring the mine into full production is $463 million. This comprises Capital Expenditure on mining equipment of $110 million and infrastructure of $66 million (previously $610 million) together with $287 million of opening up costs prior to coal production. The cost of mining equipment and infrastructure has been reduced by $434 million largely due to a reduction in planned mine production from 5 million wet tonnes per annum to 2.4 million wet tonnes per annum.
· Reduction in total cash cost of production of $18 per wet tonne, from $42 per wet tonne to $24 per wet tonne, over the mine life based on a 2.4 million wet tonnes per annum mine.
· Targeted Internal Rate of Return of 20.5% considered acceptable as part of fiscal incentives offered by the Government of Pakistan.
· Based on an Internal Rate of Return ("IRR") of 20.5%, the electricity tariff is estimated to be in line with the most recently published Pakistan National Electricity Power Regulatory Authority ("NEPRA") allowed tariff for electricity produced from local coal, and significantly below NEPRA's tariff for electricity generation using oil powered plants (approx. $0.225/kWh).
· Baseline studies complete for the Environment and Social Impact Assessment ("ESIA"), with the Impact Study to be finalised in 4th Quarter 2012.
· Initial production of c. 1 million wet tonnes per annum expected to commence in 2014, with full production of 2.4 million wet tonnes per annum expected from 2015 onwards. The lignite requirement for a 300MW power station has been determined by Mott MacDonald as 2.2m wet tonnes per annum. Accordingly, the Company has sufficient reserves to support a 300 MW power plant for 50 years.
· The principal method of mining for the first 8 years of operation (5 years of production) will be truck and shovel. The mine production can be increased by introducing more and/or larger equipment with the potential to gain the benefit of economies of scale and hence reduce production costs.
Shahrukh Khan, CEO of Oracle, said:
"The reduced investment and production costs contained within the Implementation Plan significantly enhance the commercial viability of our project.
"The purpose of commissioning the Implementation Plan is to put in place a plan to supply a 300 MW power plant from Block VI of the Thar Coalfield, based on appropriate selection of equipment and taking into consideration all the exploratory and analytical investigations carried out to date, including the Technical Feasibility Study undertaken by SRK Consulting, and establishing capital and operating costs. The Plan has confirmed that the capital and operating cost for a 2.4 million wet tonnes per annum mine are such as to provide a lignite price leading to an acceptable power offtake tariff from an on-site power plant based on coal mine Project IRR of 20.5% considered acceptable under the fiscal incentives provided by the Government of Pakistan.
"The results of the Plan, combined with the project de-risking we have achieved through the signing of a Joint Development Agreement with Karachi Electric Supply Company, demonstrate that our goal of bringing the project into production is not only attainable but also highly attractive in a commercial sense. We are now much closer to unlocking the value of the Block VI in the Thar Coalfield.
"Our immediate focus now turns to predevelopment work at site leading to securing the project finance required to bring the mine into production."
Mr Brian Rostron is Mining and Contracts Manager for Oracle Coalfields Plc and has sufficient experience relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined under the JORC Code (2004) and the AIM Rules for Companies. Mr Rostron is a member of the Institution of Materials Minerals and Mining, a Fellow of the Geological Society and a Fellow of the Institute of Quarrying. Mr Rostron consents to the inclusion in this announcement of the matters based on his information in the form and context in which it appears.
Ends
For further information:
Oracle Coalfields PLC
Shahrukh Khan, CEO +44 (0) 20 7317 4050
Blythe Weigh Communications
Tim Blythe, Robert Kellner, Samantha Ryan +44 (0) 20 7138 3204
Seymour Pierce (Nominated Adviser & Joint Broker)
Stewart Dickson / Julian Erleigh (Corporate Finance) +44 (0) 20 7107 8000
Richard Redmayne / Jacqui Briscoe (Corporate Broking)
Novus Capital Markets (Joint Broker)
Denis Christie, Charles Goodfellow +44 (0) 20 7107 1881
Notes to editors:
Oracle Coalfields PLC (AIM:ORCP) is the UK coal developer of a lignite mineral property located in the south-eastern desert of the Sindh Province, Pakistan. The property is Block VI of the Thar Coalfield, covering an area of 66.1km2.
Thar Coalfield project history:
· 2007 - Oracle received the exploration license for Block VI.
· 2008 - Dargo Associates Limited prepared a Competent Persons report on Block VI.
· 2010 - SRK Consulting Limited was engaged to carry out a Technical Feasibility Study for the development of a mine to supply a power plant, and to prepare a JORC compliant Mineral Resource Estimate . Oracle commission RPS Aquaterra to produce a Hydrogeological Report and Wardell Armstrong International and Hagler Bailly Pvt. to prepare an Environmental and Social Impact Study.
· February 2012 - Oracle engaged Mott MacDonald to carry out a Pre-Feasibility study for power generation to examine the range of power plants that could be constructed at the mine site along with the volumes of lignite required for plants of various capacities from 300MW to 900MW. The Mott MacDonald study confirmed the suitability of the lignites for both pulverised fuel and circulating fluidised bed power plants.
· April 2012 - Mining lease granted to Oracle
· June 2012 - Oracle signs a Joint Development Agreement with the Karachi Electric Supply Company to develop a mine-mouth 300MW power plant, with the provision to increase its capacity to 1100MW. Technical Feasibility Study completed and announced by SRK Consulting. Mining Lease issued. The ESIA Baseline Studies are complete with impact study to be finalised in 4th Quarter 2012.
· July 2012 - Oracle commission Dargo Associates Limited to prepare Implementation plan to demonstrated the capital and operating costs for the development of a 2.4 million wet tonnes lignite mine to support a 300MW power plant.
This information is provided by RNS
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