Bounty Mining, AustPac Forge Ahead with Development of Wongai Coal Mine in Queensland

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Researched by Industrial Info Resources Australia (Perth, Australia)--Bounty Mining Limited (ASX:BNT) (Sydney, New South Wales) and joint-venture (JV) partner AustPac Resources Capital Property Limited (ASX:APG) (Sydney, New South Wales) have made strides in the development of the AU$500 million (US$467.83 million) grassroot Wongai underground coal project in north Queensland.

The project is undergoing assessments to determine the practicality of the proposed mine site and its economic viability for the joint venture. According to project sources, the mine has an inferred resource of 67.5 million tons and is expected to produce approximately 1.5 million to 1.7 million tons per year of high-quality coking coal.

Should the resources be proven economically viable, coal will be mined by minimalist-impact, underground-place-change methods, and processed on site. When extracted, the coal would be hauled by truck to the northern barge loader, almost 18 kilometers away, or transported by overland conveyor systems. Upon arrival, the coal would be loaded onto barges, then loaded offshore into larger ocean-going vessels.

Existing infrastructure precludes the need for major port developments or major dredging of channels. However, the project would need a 7-megawatt (MW), diesel-fired power plant and a camp to house more than 300 staff during construction. The number of staff would fall to less than 150 when the mine becomes operational. The power plant would be constructed on a build, own, operate and maintain (BOOM) basis.

A farm-in agreement provides an option for Bounty to earn up to a 40% equity position in the project via expenditures on resource delineation; pre-feasibility and feasibility studies; and finalization of the environmental impact statement. Bounty also has the right to acquire a further 11% equity in the project, taking it to a 51% equity position prior to the construction phase. The Australian Securities Exchange said recently that Bounty Mining has been appointed manager of the Wongai project for the life of the project.

Assuming that the feasibility study is completed on time, it is expected that tenders will be released for the project in early 2015, with an estimated construction kick-off at the end of the year. The joint venture is targeting a completion date in the last quarter of 2017.

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