Deals



Prairie Mining Acquires the Debiensko Hard Coking Coal Project


Posted: 11th October 2016 08:34

Prairie Mining is pleased to announce that it has acquired the Debiensko Hard Coking Coal Project, a fully permitted, "mine ready" project of significant global scale. This is a transformational acquisition marking Prairie's entry into the hard coking coal sector, complementing Prairie's advanced Lublin Coal Project, and creating a multi-project coal development company based in Poland to fuel European industry.

Prairie believes Debiensko has the potential to become a strategically important supplier to the European steelmaking industry and will actively pursue Debiensko's development alongside its continued progress at its flagship Lublin Coal Project.

HIGHLIGHTS:

"For a long time, Debiensko has been regarded as the last major undeveloped hard coking coal project in Europe" saidBen Stoikovich, Chief Executive Officer of Prairie. "This transaction not only marks Prairie's entry into the hard coking coal sector through ownership of a strategically located and fully permitted asset on the doorstep of Central European steelmakers, but also further cements our belief in the future of the Polish coal mining industry."

Founder and Managing Partner of CD Capital, Carmel Daniele said: "CD Capital, as a cornerstone investor in Prairie, is very excited about the company's successful addition of a second coking coal project.  We are long-term investors and partners in the group and we are committed to working with Prairie's management team to realise the full development potential of its projects. The acquisition of the Debiensko hard coking coal project, together with the semi-soft coking coal from Prairie's flagship Lublin Coal Project, will position Prairie to be the next strategic coking coal supplier to Europe's steel industry."

DEBIENSKO HARD COKING COAL PROJECT

The Debiensko Hard Coking Coal Project ("Debienkso" or "Project") is a fully permitted, hard coking coal project located in the Upper Silesian Coal Basin in the south west of the Republic of Poland. It is approximately 40km from the city of Katowice and 30km from the Czech Republic.

The Project is bordered by the Knurow-Szczyglowice Mine in the north west and the Budryk Mine in the north east, both owned and operated by Jastrzębska Spółka Węglowa SA ("JSW"), Europe's leading producer of hard coking coal.

The Debiensko mine was originally opened in 1898 and was operated by various Polish mining companies until 2000 when mining operations were terminated due to a major government lead restructuring of the coal sector caused by a downturn in global coal prices. In early 2006 New World Resources Plc ("NWR") acquired the Project and commenced planning for the Project to comply with Polish mining standards, with the aim of accessing and mining hard coking coal seams. In 2007, the Minister of Environment of Poland approved the Group's development plan and in 2008 granted NWR a 50-year mine license for Debiensko.

Revised Development Approach

Following detailed technical due diligence by Prairie Mining Limited ("Prairie" or "Company"), the Company is confident that a revised development approach would allow for the early mining of profitable coal seams, whilst minimising upfront capital costs. This is likely to include focusing on a smaller area of Debiensko to target coal seams that are more readily accessible. Prairie has proven expertise in defining commercially robust projects and applying international standards in Poland.

Prairie has reported an Exploration Target for this target area in accordance with the JORC Code (2012).

Exploration Target Range

Extensive drilling was carried out historically at Debiensko and historical resources published to Polish reporting standards (non-JORC). Prairie's Exploration Target has been estimated for the following seams 401/1, 401/2, 402/1, 403/1, 403/2, 404/3, 404/5, 404/9, 405, 406/1, 407/2, 407/3, 408/1, 408/3, 408/5 and 409/1. To allow for possible geological and modelling uncertainty a deduction of 20% has been applied to give the range of tonnages reported below.

The tonnages in Table 2 below are for the seams that have been assessed and for which there has been insufficient exploration to be considered as resources at this time. The figures therefore represent the potential which is dependent on further exploration and reviews of the area.

Potential Coal Quality

Historical coal quality analysis completed at the Project, and based on Polish reporting standards, has demonstrated coal qualities indicative of internationally traded benchmark premium hard coking coals.

Table 3 below gives the potential range of weighted average seam qualities. These are on an air dried basis. It was standard practice, at the time of sampling, to include dirt partings up to 5 cm in thickness in the coal sample, however, if the percentage ash was greater than 12% the sample was washed before further analysis. Partings greater than 5 cm in thickness were not analysed.

Infrastructure

As part of the transaction, Prairie has acquired approximately 15Ha of land and all related facilities critical to the development of the Project. Significant historical capital investment positions Debiensko to become a meaningful and near term regional hard coking coal producer.

With existing site facilities and necessary infrastructure including power, water, rail and road in addition to the mining concession, environmental consent and local planning all being in place, the Project is considered "development-ready".

The Debiensko mine was previously connected to the main Polish rail network and a currently inactive railway siding is still in place and in sound condition. Poland is served by ~23,420 kilometres (14,550 mi) of railway tracks using standard international gauge, and provides rail connections to major regional end users of coking coal and for export. Further, asphalt roads surround and connect the Debiensko mine site to the major road network.

Next Steps and Work Program

The first priority of the Company is to undertake a detailed review of historic exploration, geophysical survey, drilling, coal quality, and development data acquired through this transaction. This will be followed by an infill core drilling program and 3D geological modelling in order to successfully delineate hard coking coal resource in accordance with the JORC Code (2012).

Through this transaction, Prairie has successfully acquired a full project team of Polish mining specialists who are part of the existing Debiensko team. Since, under Polish Law, Debiensko is a fully permitted mine site, Prairie now retains the employment of a mine manager and chief engineer amongst other crucial positions who will integrate with Prairie's world class team to re-engineer the Project.

 


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