Allegiance Coal Ltd - Further reduction in start-up capex at the New Elk hard coking coal mine
Allegiance Coal Ltd (ASX:AHQ)

Further reduction in start-up capex at the New Elk hard coking coal mine

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Highlights

What's happened?

Allegiance Coal Limited (ASX:AHQ) have announced that start-up capital for the New Elk hard coking coal mine (including working capital) has been reduced from US$40M to US$24M following a further review of the New Elk Mine plan by independent mine engineers, Stantec.

What are the key highlights?

  1. The US$40M start-up capital number in the Start-up Mine Plan was itself a reduction of the start-up capital number of US$56M derived from the New Elk Mine maiden feasibility study also undertaken by Stantec, the results of which the Company announced on 28 November 2019 (Feasibility Study).
  2. The key takeaway from Stantec’s work is that the delay in capital expenditure does not materially change the total capital and cash operating costs nor in anyway the saleable coal tonnes.

For further information, please view the announcement linked below.

Managing Director's Summary

Mark Gray

"The Board continually challenges itself to assess the best way in which to develop New Elk, and to create as many options as are available given the availability of capital and the state of the steel, and steel making coal industries. This revision to the Start-up Mine Plan, what we call the ‘Slow Start-up Mine Plan’, offers Allegiance the ability to commence production with a significantly lower start-up capital demand, if Allegiance is required, or feels it would be prudent at the time, to do so. Allegiance continues to work with its potential equity and debt providers in sourcing the capital needs of New Elk, and remains confident of doing so given the potential low cost of New Elk to deliver coal to the seaborne market, coupled with what we believe will be a major loss of coking coal supply this year as high cost producers are forced out of the market."

Mark Gray
Managing Director, Allegiance Coal Ltd
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