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The British Government has opened the door for the renewal of its
domestic coking coal industry, approving the first deep coal mine in the UK in 30 years.

The approval of West Cumbria Mining’s Woodhouse Colliery has come after eight years
of deliberations from the UK Government on the 3.1Mtpa steelmaking coal mine, which
will create around 500 local jobs.

While approvals processes for coal have become tougher to navigate across the world
the news the mine has been granted planning permission by Levelling-Up Secretary
Michael Gove on Wednesday could open the door for the industry’s revival.

It came with an admission from Gove that steelmaking processes to replace conventional
blast furnace production would not be widespread commercially until the 2040s.

In a letter outlining the decision, Gove’s department said the secretary was “satisfied that
there is currently a UK and European market for the coal.”

“The Secretary of State agrees that there is no certainty that Electric Arc Furnaces (EAF)
will make a significant contribution to UK steel production in the short (5-10 years) to medium
term (10- 15 years) and agrees that whilst there is a likelihood that its use will increase
across Europe, the extent to which this may be the case cannot be predicted with any
degree of certainty,” they said.

Who else is in line?

The news opens a door for other British coal developers, with New Age
Exploration (ASX:NAE) among the best placed to move next.
It owns the Lochinvar coking coal deposit, which straddles the border between England
and Scotland and contains 111Mt of metallurgical coal including 49Mt of indicated resources.

A scoping study in October 2014 confirmed its potential for a low cost, long life 1.9Mtpa
long wall mining project which could deliver 1.4Mtpa to UK and European markets.

An update in March 2017 on the back of a rise in metallurgical coal prices delivered a robust
set of economics with a post tax NPV of US$410 million (AUD$610m today) with an
IRR of 27%, 4 year payback period and 26 year mine life.

A review released last week showed those numbers remained robust despite cost
increases in the UK.

“This review of the Scoping Study re-confirms Lochinvar remains a commercially
robust project,” NAE executive director Joshua Wellisch said on November 28.

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