Deepgreen Minerals Corp will concentrate on its coal mining business and sell all non-core coal assets, including 5% in Bligh Oil & Minerals; 27% in the South African company, Samroc; 50% of the Costerfield antimony gold project in Victoria; and 20% in AGD Mining Limited
The sales are expected to realise over $5m, while Deepgreen will retain 100% ownership of the Pageton coal project in West Virginia, 26% of Western Canadian Coal, 65% of Asia Energy Corporation and 20% of Consolidated Goldbank Corp.
The combined production potential of the projects and companies is put by the company at over 15mtpa of coal within five years.
Development of the Pageton project is underway and production is scheduled to commence in the final quarter of this year. An operations analysis recently completed by independent coal industry consultants, Marshall Miller & Associates, has estimated Pageton will generate pre-tax cash flow of $46.3m over its six-year life with pre-tax net income estimated at $9m in the first year. This figure is based on a coking coal price of $US30/t fob mine, negotiated with US Steel.
Western Canadian Coal has coal resources of over 250mt in north-eastern British Columbia, Canada. The coal deposits are well serviced by existing township, road, rail and power facilities and coal loading ports at Prince Rupert and Vancouver, built at a cost of $1,500m in the late seventies.
The rail and port facilities are capable of handling 14mtpa and are currently operating at 20% of capacity.