Morien Resources Corp announced that it has received notice from Kameron Collieries ULC, the owner/operator of the Donkin Coal Mine in Cape Breton, Nova Scotia, that its coal handling, preparation and processing plant is now operational. The capacity of the washplant is sufficient to process the permitted production at Donkin. Processed Donkin coal product can be sold either as a low ash, high-energy thermal coal and/or as a high quality metallurgical coal. Kameron has indicated that it expects the washed coal quality of Donkin to be a high fluidity, high volatile metallurgical coal, with 3.0% ash, approximately 1.65% sulphur, 13,500+ BTU/lb, 0.88% RO, +25,000 ddpm fluidity, and 120-150 dilation.
Kameron is targeting production of approximately 350,000 to 450,000 tonnes in 2017, 1.2 to 1.8 million tonnes in 2018, and 2.6 to 2.75 million tonnes of saleable coal in 2019 (production volumes are subject to change based on numerous market and non-market factors). Current coal production is being stockpiled on site, and trucked and stockpiled at the Provincial Energy Ventures port in Sydney, Cape Breton where it awaits export.
* The Donkin Coal Technical Report, dated November 2012, found on Morien’s SEDAR profile, supports the above technical disclosures. The Technical Report presents the results of a Pre-Feasibility Study on the Donkin Project and the reserves defined by the Pre-Feasibility Study prepared by Xstrata Coal Pty Ltd. Production assumptions are based on Probable Reserves of 58 million tonnes. The Reserve estimate is based on an Indicated Resource of 174 million tonnes.
Morien Royalty and Milestone Payment
Morien owns a gross production royalty of 2% on the first 500,000 tonnes of coal sales per calendar quarter (excluding the initial 10,000 tonnes of coal produced and sold from Donkin) and 4% on any coal sales from quarterly tonnage above 500,000 tonnes (“Royalty”). The Royalty is payable to Morien on a quarterly basis over the anticipated 30 plus year mine life.
Morien is entitled to receive its third and final milestone payment of $1.5 million from Kameron on the earlier of first commercial sale of export coal from Donkin and the third anniversary of the closing of the transaction (February 27, 2018).