Stanmore Coal has announced plans for an $869 million underground longwall mine in Queensland with first coal expected to hit the market in 2017.
The company’s managing director Nick Jorss said the industry downturn has created a cost-competitive environment which makes the Belview coking coal project attractive to Stanmore.
The company expects it can deliver coal to market with a profit margin of US $93 per tonne, based on 80 per cent of the Belview coal producing premium grade coking coal, CQ News reported.
"I think we will benefit from a less inflationary market," Jorss said.
"Contractors are getting keener in pricing, it's a much better market now. Now is the time to be developing and building coal mines."
In November, the Brisbane-based company paid billionaire Clive Palmer $5.1m for an adjoining coal tenement EPC 1186 which will allow the company to mine a larger, shallower resource before it begins chasing deeper seams.
Last week Stanmore released an updated concept mining study to the ASX which was modelled on a 3.5 million tonnes a year single longwall operation.
The study stated annual production could be doubled to seven million tonnes a year with the construction of a second longwall at a cost of $529 million.
But yesterday the company made another statement retracting all concept study statements related to production, mine life, NPV and project economics, made on March 6 and warned “investors should exercise caution if they propose to rely on the concept study statements”.
The statement, signed by joint company secretary Doug McAlpine said the company had not done all of the studies for the Belview project that meet the assumptions used in the concept mining study.
“The study should not be considered to be a representation that the Belview project is economically viable as the assuptions underlying the study may not be considered sufficiently reliable,” McAlpine wrote.
The company said it would continue to conduct further exploration work and geological modelling in preparation of a pre-feasibility study.
The Queensland State Government stands to earn a royalty of about $20.92 from every tonne of coking coal mined.
Stanmore Coal was unavailable for comment at the time of publication.