Allegiance Coal (ASX:AHQ) owns the Telkwa Metallurgical Coal Project (“Project”), an advanced project located in northwest British Columbia comprising 148Mt of JORC compliant resource, of which 90% or 134Mt is in the measured category. The Project has been the subject of an enormous amount of exploration by prior owners including 826 drill holes for 91,000 metres of drilling from which 321 were cored for coal sampling and analysis. Allegiance Coal has the benefit in today’s dollars of around A$40M of historical exploration data.
The Project enjoys exceptional logistics located just 10km from Canadian National Rails mine rail line from which it is then a short 360km flat rail haul to the deep water Port of Prince Rupert and Ridley Island Coal Terminal. Ridley is heavily under-utilised with 18Mtpa of export capacity of which only ~6Mtpa is being used. The shipping distance from Ridley to the north Asian steel mills including Japan, is shorter than the shipping distance from central Queensland.
Allegiance Coal recently completed its Project pre-feasibility study declaring 63Mt of proven and probable reserves, which could be recovered through shallow open pit mining for an all in cash cost before tax, free-on-board at Ridley Island Coal Terminal, for just US$55 per tonne of saleable coal. This places the Project uniquely in the lowest 5 percentile on the global seaborne metallurgical coal cost curve.
2017-2018 Strategic Priorities
Allegiance Coal plans to complete its Project feasibility study and environmental assessment in H1 2018, culminating in the filing of applications to mine in Q4 2018.
The Telkwa Metallurgical Coal Project ticks the boxes that investors like to see. A relatively rare commodity, where supply is limited, demand is strong, and the mining of that commodity involves low start-up capital expenditure, and is mined at an exceptionally low cost. Add to that, British Columbia is a wonderful province within which to do business.
Metallurgical coal is key to steel production, and steel production is key to global infrastructure, which in turn is key to the development of countries and continents such as China, India, and Africa. Without metallurgical coal, this development cannot take place. Relative to lower grade power station coal, as well as iron ore, the other key ingredient to steel production, economically recoverable metallurgical coal is scarce and in high demand.
Seaborne metallurgical coal is dominated by Australia, which is a major cause for concern to the Asian steel mills not only because of the negotiating strength of the major producers such as BHP and Rio Tinto, but also because of the supply disruptions caused by cyclones in Queensland, and long delays in loading vessels because of port congestion. British Columbia, and in particular the Project, offer the Asian steel mills an alternative source of metallurgical coal supply within close proximity and with none of the issues that Australia brings.
Stock Exchange Listing: ASX:AHQ
Commodity: Coking Coal
Stage of Production: Development
Market Cap: A$8 million
Board of Directors:
Non Executive Chairman
Malcolm is a geologist with more than 40 years experience in exploration, research and executive management of both private and listed companies on the ASX, TSX and LSE. Currently the Executive Chairman of Dampier Gold Ltd (ASX:DAU).
Mark acquired a coal mining services company out of voluntary administration in 2003, listed it in 2005, and took its market cap to $40M. Mark has run mining entities for 15 years and prior to that, a successful career in law and investment banking.
Non Executive Director
Dave was instrumental in advancing a number of coal projects in northeast British Columbia, four of which became significant mines. He was also co-founder of Western Canadian Coal. As a mining engineer, Dave has over 40 years experience in the North American coal industry.
Jonathan has been the CFO and held directorships of many exploration and producing operations across several commodities, in multiple jurisdictions and stock exchanges. He is an accountant with more than 25 years experience.
Chief Mining Engineer
Dan is a mining engineer with more than 25 years coal mining experience in Canada. He was the Operations Manager of Anglo American’s coal mines in British Columbia where he developed, built and ran all its coal mining operations.
Environment & Government Relations
Angela has permitted two coal mines in British Columbia for Anglo American. A 20 year industry professional Angela has an in-depth knowledge of the mining and environmental regulatory regime in British Columbia.
Allegiance Coal (ASX:AHQ) will be presenting their mining projects to prospective investors at the International Mining and Resources Conference. Register as an investor now!