POPLAR GROVE MINE CONSTRUCTION UPDATE

Transcription

1 March 15, 2018 HIGHLIGHTS: POPLAR GROVE MINE CONSTRUCTION UPDATE Significant prgress made n cnstructin activities at Ppular Grve; Surface excavatin and develpment wrk is nw substantially cmplete; Majr prcessing equipment installed at the cal handling and prcess plant ( CHPP ) and is nw ~70% cmplete; The 7km 69kV pwer line and substatin cnstructin is nw cmplete and is prviding lw cst pwer t the mine site; and Undergrund excavatin fr the slpe (decline) is prgressing and purchase rders have been issued fr the undergrund mining and supprt equipment. Abnrmal weather cnditins in recent weeks resulted in minr impacts t cmpletin schedule; Unseasnably heavy rains have resulted in sme f the wrst flding in the lcal area arund Pplar Grve in ver 20 years; Impacts n site were carefully managed and the resultant delays and csts t the cnstructin schedule were minimized thrugh management s cunter measures; Regulatry inspectin f the mine site ccurred last week and resulted in apprval t recmmence cnstructin activities. Cnstructin activities are nw back t full capacity; and Fllwing a detailed engineering and cst review, the site clean-up and bx cut remedial wrks are expected t be mdest, and delays t the cmpletin schedule are expected t be apprximately fur weeks. Actins are nw underway t further reduce this schedule impact. Paringa cntinues t see imprvements in the dmestic cal market ver the medium term; 2018 and 2019 prductin fftake is almst fully cmmitted; Future cal sales cntracts are fcused n delivery frm 2020 nwards, and the cmpany is ptimistic that imprving market cnditins - due t recent industry ratinalisatin, cnslidatin and psitive regulatry effects - will prvide a platfrm fr imprved pricing; Murray Energy Crpratin s recent acquisitin f Armstrng Energy Inc further cnslidates reginal cal prductin capacity and enhances Paringa s value t utilities as ne f the last remaining independent surces f high quality Illinis Basin ( ILB ) cal utside f the majrs; The pwer demand effects f the recently annunced Sectin 232 steel and aluminium tariffs are expected t be material t industrial electricity demand with a range f reginal aluminium smelters and steel plants already annuncing restarts; and US and internatinal cal demand cntinues t utpace supply and US cal stcks have been prgressively falling if these cnditins cntinue, then we culd expect t see higher cal pricing as we ramp Pplar Grve t full prductin. Head Office: 6724 E Mrgan Avenue, Suite B Evansville Indiana New Yrk Office: 6 E 46 th Street, 3 rd Flr New Yrk NY Registered Office: Level 9, BGC Centre, 28 The Esplanade Perth WA inf@paringaresurces.cm Website: ABN:

2 Pplar Grve Cnstructin Wrks n the Cal Handling & Preparatin Plant and the Slpe Paringa Resurces Limited ( Paringa r the Cmpany ) (ASX: PNL) is pleased t prvide the latest cnstructin and marketing update. All majr prcessing equipment is installed at the CHPP and surface excavatin and develpment wrks are substantially cmplete. The materials handling system cnstructin is als prgressing t plan, with cmpletin f the raw cal reclaim feeder and cnveyr and cmmencement f installatin f the raw and clean cal stacking cnveyr systems. Electrical pwer is installed t site, with the pwer line and substatin being cmmissined n budget and time. The pwer line, supplying 69kV ver 7km, was cnstructed by Grves Cnstructin f Madisnville, KY and passed the MSHA cmmissining inspectin. Wrk cnstructing the circuit frm the substatin t the slpe cnstructin area is cmplete and FKC, the slpe cntractr, is nw running n lw cst mains pwer. Excavatin f the mine slpe (decline) cmmenced, after cmpletin f the final engineering and design f the slpe rf supprt by Keystne Mining Services LLC, an affiliate f Jennmar, the wrld s premier supplier f rf supprt fr the mining industry. Paringa issued purchase rders fr undergrund prductin equipment t Kmatsu Mining (frmerly JOY Glbal), J.H. Fletcher, and ther equipment suppliers. Final equipment specificatins are cmplete and manufacturing time slts have been secured with n issues expected with equipment delivery prir t first prductin. Equipment rders are based n firm pricing cmmitments. A cmpetitive equipment finance prcess is nearing cmpletin with final dcumentatin nw well prgressed. Materially imprved lease rates and terms have been negtiated by agreeing t prvide 10% f equipment cst as depsits. This will result in a cmmensurate reductin in lease csts. Page 2

3 Abnrmal weather cnditins and impacts t cnstructin schedule Unseasnably heavy rains alng the entire Ohi River valley has resulted in extensive reginal flding. The area arund the Pplar Grve Mine experienced the wrst flding in ver 20 years. Althugh all levee systems surrunding the barge lad ut facility and CHPP plant were in peratin and perfrmed t design during this event, the mine site levee system was still under final cnstructin and, as such, the slpe pen cut and mine area were impacted by fld water. This flding halted cnstructin activities at the site fr apprximately tw weeks and, subsequent t the event, additinal time will be required fr site clean-up in saturated grund cnditins and minr repairs. Fllwing a detailed engineering and cst review, we can cnfirm that the site clean-up and bx cut remedial wrks are expected t be mdest, and delays t the cmpletin schedule are expected t be less than fur weeks. Actins are nw underway t further reduce this schedule impact. Paringa s nsite management team minimized the site damage thrugh rapid actin and careful supervisin. The decisin taken late in 2017 t change frm a large earthen bx cut access plan t a slpe and shaft, with structural steel supprt, prved highly valuable as the extensive grund supprt prevented any significant damage frm the fldwaters. T prevent future shrt-term ccurrences, Paringa is wrking with its site develpment cntractr t build additinal temprary fld cntrl structures arund the mine site until the final levees are cmpleted in May. Once cmplete, the final levees will prvide prtectin against severe fld events in the same manner as the CHPP and barge lad-ut levee system were prtected during this recent event. The entire system has been designed t prtect the mine site and infrastructure against 1 in 100-year fld events. Cal market update As nted befre, Paringa has a strng cntracted sales psitin, with 2018 and 2019 prductin almst fully cmmitted. Future cal sales cntract effrts are fcused n delivery frm 2020 nwards, and the cmpany is ptimistic that imprving market cnditins - due t recent industry ratinalizatin, cnslidatin and psitive regulatry effects - will prvide a platfrm fr imprved pricing. Murray Energy Crpratin s recent acquisitin f Armstrng Energy Inc further cnslidates reginal cal prductin capacity and enhances Paringa s value t utilities as ne f the last remaining independent surces f high quality ILB cal utside f the majrs. Paringa aims t becme a valued supplier t lcal utilities and is highly encuraged by the excellent engagement, including site visits, frm a wide range f lcal utilities. The recently annunced imprt tariffs f 25% n steel, and 10% n aluminum, using Sectin 232 f the Trade Expansin Act, culd drive upwards f 3-4GW f arund-the-clck reginal electricity demand. This represents 0.7% f ttal US pwer demand grwth (r 2.8% fr industrial demand grwth), and cmpares well t the frecast ttal US demand grwth f 0.7% prir t the Sectin 232 annuncements. Kentucky, Illinis and Indiana are large prducers f steel and aluminum relative t ther US states and the psitive impacts f higher pwer demand, increased emplyment and higher GDP grwth are expected t be beneficial t ur reginal market. The additinal plant demand culd include: Century Aluminum restart in Hawesville, KY, with an expected 600MW f incremental demand; Big River, AK t expand Electric Arc Furnace peratins with an expected 450MW f incremental demand; Page 3

4 Alca s Warrick Plant, IN, culd restart their remaining tw ptlines with an expected incremental demand f 300MW; New Madrid, MI, aluminum smelter restart with an expected 600+ MW f incremental demand; and US Steel restart f the Granite City blast furnace, IL, and AK Steel will likely restart peratins at Ashland, KY. US and internatinal cal demand cntinues t utpace supply and US cal stcks have been prgressively falling - if these cnditins cntinue, then we shuld expect t see higher cal pricing as we ramp Pplar Grve t full prductin. Cmmenting n the prgress made during the last few mnths Mr. Grant Quasha, Paringa s Managing Directr and CEO, said, Cnstructin at the Pplar Grve Mine cntinues t prgress well, and ur team and cntractrs have perfrmed extremely well t minimize delays and csts during the recent flding. I wuld like t persnally thank them fr their utstanding effrts in managing this event and mitigating cst and time impacts. I wuld like t reiterate that we are ding everything we can t make up lst time and minimize cst impacts. Imprtantly, ur levee system, where cmpleted, functined as designed and prevented any fld water frm entering the site. When cmplete, the final levees will prvide prtectin against all future 1 in 100-year fld events in the same manner. We cntinue t be very encuraged by the strng interest frm the US dmestic utility market and lk frward t the market dynamics strengthening as Pplar Grve begins t ramp up t full prductin. Fr further infrmatin, cntact: Grant Quasha Managing Directr & CEO gquasha@paringaresurces.cm Page 4

5 THE BUCK CREEK COMPLEX Buck Creek cal mining cmplex ( Buck Creek Cmplex ) is lcated in the Western Kentucky regin f the Illinis Basin. The Buck Creek Cmplex cmprises f ver 40,000 acres f cal leases and includes tw develping mines: 1. Pplar Grve Mine: Permitted 2.8 Mtpa thermal cal mine which is nw in cnstructin; and 2. Cypress Mine: Permitted 3.8 Mtpa Cypress Mine Refer belw fr a map f Paringa s Pplar Grve and Cypress Mines in relatinship t histrical cal mining in the Western Kentucky regin f the Illinis Basin. Map f Buck Creek Cmplex and Lcal Mining Operatins in Western Kentucky (Illinis Basin) Page 5

6 Frward Lking Statements This reprt may include frward-lking statements. These frward-lking statements are based n Paringa s expectatins and beliefs cncerning future events. Frward lking statements are necessarily subject t risks, uncertainties and ther factrs, many f which are utside the cntrl f Paringa, which culd cause actual results t differ materially frm such statements. Paringa makes n undertaking t subsequently update r revise the frward-lking statements made in this annuncement, t reflect the circumstances r events after the date f that annuncement. Cmpetent Persns Statements The infrmatin in this annuncement that relates t Explratin Results, Cal Resurces, Cal Reserves, Mining, Cal Preparatin, Infrastructure, Prductin Targets and Cst Estimatin was extracted frm Paringa s ASX annuncements dated March 28, 2017 entitled Expanded BFS Results Cnfirms Develpment Pathway t A$850 millin NPV and December 2, 2015 entitled BFS Cnfirms Buck Creek will be a Lw Capex, High Margin Cal Mine which are available t view n the Cmpany s website at The infrmatin in the riginal ASX annuncements that related t Explratin Results and Cal Resurces is based n, and fairly represents, infrmatin cmpiled r reviewed by Mr. Kirt W. Suehs, a Cmpetent Persn wh is a Member f The American Institute f Prfessinal Gelgists. Mr. Suehs is emplyed by Cardn. Mr. Suehs has sufficient experience that is relevant t the style f mineralizatin and type f depsit under cnsideratin and t the activity being undertaken t qualify as a Cmpetent Persn as defined in the 2012 Editin f the Australasian Cde fr Reprting f Explratin Results, Mineral Resurces and Ore Reserves and t qualify as a Qualified Persn as defined in the 2011 Editin f the Natinal Instrument and Canadian Institute f Mining s Definitin Standards n Mineral Reserves and Mineral Resurces. The infrmatin in the riginal ASX annuncements that related t Cal Reserves, Mining, Cal Preparatin, Infrastructure, Prductin Targets and Cst Estimatin is based n, and fairly represents, infrmatin cmpiled r reviewed by Messrs. Justin S. Duthat and Gerard J. Enigk, bth f whm are Cmpetent Persns and are Registered Members f the Sciety fr Mining, Metallurgy & Explratin. Messrs. Duthat and Enigk are emplyed by Cardn. Messrs. Duthat, and Enigk have sufficient experience that is relevant t the style f mineralizatin and type f depsit under cnsideratin and t the activity being undertaken t qualify as Cmpetent Persns as defined in the 2012 Editin f the Australasian Cde fr Reprting f Explratin Results, Mineral Resurces and Ore Reserves and t qualify as Qualified Persns as defined in the 2011 Editin f the Natinal Instrument and Canadian Institute f Mining s Definitin Standards n Mineral Reserves and Mineral Resurces. Paringa cnfirms that: a) it is nt aware f any new infrmatin r data that materially affects the infrmatin included in the riginal ASX annuncements; b) all material assumptins and technical parameters underpinning the Cal Resurce, Cal Reserve, Prductin Target, and related frecast financial infrmatin derived frm the Prductin Target included in the riginal ASX annuncements cntinue t apply and have nt materially changed; and c) the frm and cntext in which the relevant Cmpetent Persns findings are presented in this annuncement have nt been materially mdified frm the riginal ASX annuncements. Page 6