Jameson Resources Ltd (ASX:JAL) has projected increases to both capital and operating costs for its Crown Mountain hard coking coal project in Canada – in which it holds a 90% interest – with an update on project feasibility which sought to assess the impact of inflation since its Bankable Feasibility Study (BFS) 5 years ago.
The 2020 BFS on Crown Mountain – which is located in Elk Valley, British Colombia – made the case for a development project to produce high-quality hard coking coal, supported by a competitive operating and capital cost structure.
However, inflationary increases in both capital and operating costs in Canada and competitor producer locations since then encouraged Jameson to update this, bringing independent technical advisers Allnorth, Sedgman and Stantec to reassess the project under these parameters.
According to their review, pre-production capital (without contingency) for Crown Mountain has increased by an estimated 28% from US$309 million to US$394 million, while cash operating costs FOB Vancouver) has risen 15% from US$89.41 per tonne in the Yield
Optimisation Study to US$102.79 per tonne.
Taken together, the increases to capital and operating costs and coal price forecasts have produced an overall increase of 200% in pre-tax NPV10 from US$469 million to US$942 million in the Yield Optimisation Study.
This work followed a Yield Optimisation Study in 2021 which had confirmed increased production and notably improved potential economic outcomes by increasing product ash levels.
Jameson chair Nicole Hollows said the update had shown substantial increases to the project’s high-level economics, but added that, “With the continued progress of the Environmental Assessment process, this update highlights the advanced position of the Project compared with greenfield projects in Canada, Australia or other key producer locations.”
“There has been more than US$ 20 billion in steelmaking coal M&A in the last year highlighting that existing producers have limited options for organic growth,” she added.
“Crown Mountain’s position as the most advanced steelmaking coal project in Canada and its substantial underlying value is further enhanced by the Feasibility Update which demonstrates the project’s cost competitiveness compared to current and planned production.”
Jameson shares have risen following the news. At 11:22 AEST, they were trading at 4 cents – a rise of 33.33% since the market opened.
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