Atrum Coal (ASX:ATU) has increased its total anthracite resources at the Groundhog coal project in British Columbia to 609 million tonnes, coming from 305 million tonnes. It’s important to note that almost 60% of the total resources are in the measured and indicated categories which means that the confidence in these resources is higher than in the 260 million tonne coal resource in the inferred category. This has led to a substantial increase in the mine life and the updated pre-feasibility study is now estimating the after-tax NPV10% of the Groundhog project at almost A$1.7B.
This will extend the mine life of this mine and will allow Atrum Coal to increase the planned output as well. The company is sticking to its game plan as it wants to bring in a partner willing to fund all of the capital expenditures in return for a minority stake in the Groundhog project. The initial output is expected to be 3 million tonnes per year with subsequent production increases being financed through internally generated cash flow. The demand for the anthracite coal could be relatively high as the calorific value is estimated to be in excess of 7,000 kcal/t.
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Disclosure: The author holds no position in Atrum Coal. Please see our disclaimer for current positions.
