TIDMPDZ
RNS Number : 3328N
Prairie Mining Limited
08 August 2017
PRAIRIE MINING LIMITED
NEWS RELEASE | 8 August 2017
UPDATE ON JAN KARSKI MINE
-- The Bankable Feasibility Study being prepared by China Coal
for the development of the Jan Karski mine is now due for
completion in September 2017. This follows extensive meetings in
Poland during the last month between Prairie, its strategic partner
China Coal and Polish government officials
-- Under the Strategic Co-operation Agreement between Prairie
and China Coal, the BFS will support China Coal's EPC contract to
construct the Jan Karski mine and underpin a Chinese bank financing
package
-- Marketing and coal sales strategies are to be updated for the
BFS following Prairie's latest successful drilling results and
enhanced testwork establishing Jan Karski as a high-value ultra-low
ash semi soft coking coal project which is expected to attract a
10% premium to international benchmark prices
-- Prairie remains on track to submit a Mining Concession
application for Jan Karski, with significant progress made
regarding spatial planning (re-zoning) and substantial completion
of the Environmental and Social Impact Assessment; further updates
regarding spatial planning are expected in the coming weeks
-- Prairie is the first entity to apply international best
practice and modern standards in geological analysis, mine design
and environmental studies for hard coal mining in Poland
-- Prairie notes that recent comments made by Poland's Chief
National Geologist with respect to development progress at Jan
Karski are incorrect and not reflective of the official position of
the Government of the Republic of Poland with the official
Spokesperson of Poland's governing PiS Party stating the comments
made by Poland's Chief National Geologist were "neither the
position of the Government, nor of the Prime Minister"
-- Prairie remains focused on developing its two World Class
coking coal projects and continuing to make significant progress
and investment alongside partners and investors such as China Coal
and CD Capital
Prairie Mining Limited ("Prairie" or "Company") is pleased to
provide an update on development activities at its 100% owned
high-value ultra-low ash semi soft coking coal ("SSCC") Jan Karski
Mine in the Lublin Province, south east Poland ("Jan Karski" or
"Project").
China Coal BFS Progress
In November 2016, Prairie and China Coal, China's second largest
coal mining company and one of the world's most advanced and
prolific shaft sinking and underground coal mine construction
companies signed a landmark Strategic Co-operation Agreement for
the financing and construction of Jan Karski.
Under the terms of the agreement China Coal is set to complete a
Chinese Bankable Feasibility Study ("BFS") in September 2017. A
draft of the BFS was submitted to Prairie in June following which
the Company hosted two delegations in Poland from China including:
leading underground mine construction company and partner of
Prairie, China Coal No.5 Construction Company Ltd. ("CC5C");
Chinese Government's officially authorised coal mine design
institute Jinan Mine Design Institute ("Jinan"); and China's first
large scale foreign trade corporation specialising in international
engineering contracting, China National Machinery Import &
Export Corporation ("CMC").
The Chinese delegations were welcomed by the
government-appointed Governor of Lublin Province and elected
regional government officials of the Lublin region. Prairie
conducted various site visits and facilitated meetings with
domestic Polish contractors and suppliers who could participate in
the construction of Jan Karski.
Following the visits, Prairie's Chief Executive Officer
Ben Stoikovich commented: "This is a really exciting
time for Prairie, and specifically for the Jan Karski
Mine and the Lublin region. With our expert management
team and partner China Coal, one of the world's largest
and most successful coal mine construction firms, we
are moving closer to achieving all required permitting
for development of the Jan Karski Mine and delivering
much needed jobs and economic development to Eastern
Poland."
---------------------------------------------------------
Prairie and China Coal's technical teams continue to work
together to:
-- agree a final version of the BFS in September which will form
the basis of Chinese bank credit approval for funding construction
of Jan Karski;
-- enter into a complete Engineering, Procurement, and
Construction ("EPC") contract under which CC5C to construct Jan
Karski; and
-- incorporate relevant Polish content into the design and
construction phases which will include working with a range of
Polish specialists, sub-contractors and business partners.
In May 2017, Prairie announced recent coal quality testwork at
Jan Karski which confirmed it to be a high-value ultra-low ash SSCC
project. An Independent assessment by specialist coking coal market
consultants predicts that Jan Karski ultra-low ash SSCC would
potentially realise a 10% premium to international benchmark
prices.
Preliminary discussions between Prairie and select European
steel makers have confirmed the suitability of ultra-low ash SSCC
to be utilised in coke oven blends. Consequently, the Company is
currently updating the marketing and sales strategy for the coal
which will be produced at Jan Karski and will incorporate this
strategy into the BFS.
RESPONSE TO RECENT STATEMENTS MADE BY POLAND'S CHIEF NATIONAL
GEOLOGIST
On 20 July 2017 Poland's Chief National Geologist made a number
of statements regarding progress in the development of Prairie's
Jan Karski mine and the Jan Karski concessions ("Concessions").
Prairie notes that the Chief National Geologist has made errors of
fact and omission in his statements. Prairie also notes that on 31
July 2017, the official Spokeswoman for Poland's governing Law and
Justice Party ("PiS"), the Chief Press Officer of the PiS
Parliamentary Group and the Member of Parliament for the
Lublin-Chelm region made a public statement that the Chief National
Geologist's statement "is neither the position of the Government,
nor of the Prime Minister".
Background
Prairie's Jan Karski mine is situated in the Lublin Coal Basin
adjacent to the Bogdanka coal mine which has been in commercial
production since 1982 and is owned by the Polish coal mining
company Lubelski W giel BOGDANKA S.A. ("Bogdanka"). In 2012 Prairie
was awarded, through its Polish subsidiary PD Co sp. z o.o.
("PDCo"), four exclusive Exploration Concessions namely K-4-5
(Kulik area), K-6-7 (Cyców area), K-8 (Syczyn area) and K-9 (Kopina
area). In December 2014, Prairie was granted an additional coal
Exploration Concession, SawinZachód, contiguous to Jan Karski.
To progress from an Exploration Concession to a Mining
Concession in accordance with the terms of the Polish Geological
and Mining Law (2011) ("GML"), Prairie was required to complete an
agreed work program over the concession areas which included the
drilling of seven cored boreholes.
The purpose of these boreholes was to update and upgrade the
historical data over the concessions dating from the 1960's and
1970's, which is unsuitable for modern mine design and financing.
Prairie's exploration campaign also allowed advanced geotechnical
analysis that confirmed the feasibility of applying modern
roof-bolting technology to Jan Karski for independent roadway
support.
Prairie, having successfully completed its work program by the
end of 2014 and well ahead of schedule, was then required to
prepare a Polish standard resource report, known as "Geological
Documentation", for submission to the Ministry of Environment
("MoE") for approval. Geological Documentation, once approved,
triggers the Priority Right for the holder to apply for a Mining
Concession for a three-year period and also defines the boundaries
of the resource within which mining may take place in the
future.
Prairie's Geological Documentation was prepared by local Polish
consultancy GEO-EKO-WIERT which has considerable expertise in the
preparation of Mining Concession applications and regulatory
reports in Poland. Prairie formally submitted the documentation to
the Mineral Resources Committee of Poland's MoE, responsible for
the review of new resource documentation. In the Geological
Documentation, Prairie clearly outlined the area now known as the
Jan Karski mine which included all of the K-6-7 (Cyców area)
concession.
In mid-2015, a positive assessment of the Geological
Documentation was given by the Mineral Resources Committee, which
formed the basis for the formal approval by the MoE acknowledging
that Prairie had completed the minimum works program under the Jan
Karski Exploration Concessions.
The seven cored boreholes upgraded the historic resource
classification of the Jan Karski Concessions, corrected seam
correlations and demonstrated the potential to produce higher value
SSCC, aspects that were deficient in the historical geological
data. The new data obtained from Prairie's drill program allowed
modern mine design to be conducted, incorporating international
best practice in line with the requirements of international
financing institutions, which is the first time such an approach
has been applied in coal mine exploration and development in
Poland.
As a result, Prairie secured the Priority Right to apply for a
Mining Concession for Jan Karski for a three-year period until
April 2018.
Statements made by Poland's Chief National Geologist
The Polish Chief National Geologist has made a number of
incorrect claims, including that Prairie was obliged to drill 23
boreholes over the concessions.
As stated above, under the originally granted Exploration
Concessions, Prairie was required to complete an agreed work
program of seven (7) cored boreholes. These were completed well
ahead of schedule. Prairie's compliance with all of the work
program requirements was confirmed by the Government's approval of
Prairie's Jan Karski Geological Documentation in mid-2015.
Additional boreholes beyond the completed seven boreholes have no
impact at all on Prairie's Priority Right to apply for a Mining
Concession for Jan Karski. During 2015, Prairie extended the
Exploration Concessions at Jan Karski, which included the option of
drilling additional boreholes should international financing
institutions or offtakers require further geological data. Some of
these optional boreholes have either been completed, are in
progress or are currently planned to be drilled. No legal
requirement exists under the GML for Prairie to drill more than the
completed seven boreholes in order to apply for a Mining Concession
at Jan Karski.
Prairie has always sought the best and most qualified people
suitable for the development of various stages of its Polish coal
projects. Prairie notes that a new hard coal mine has not been
developed in Poland for over 25 years, and in general the current
Polish coal industry has been slow to adopt modern mine design and
technology and as a consequence suffers from higher costs and lower
profitability. A key Management Board member of PDCo is Miroslaw
Taras, a 30 year veteran mining engineer in the Polish coal
industry, former CEO of Bogdanka and Chairman of state-owned coal
producer Kompania W glowa S.A. (now renamed Polska Grupa Górnicza
sp. z o.o). Whilst Mr Taras was CEO of Bogdanka, he doubled the
production capacity and increased efficiency of Bogdanka by
developing a new coal handling and preparation plant, surface and
underground infrastructure, as well as two new shafts at the
Stefanów field which were commissioned in 2011/2012. This
represents the only significant increase in hard coal mine
production capacity in Poland in the last 25 years.
Prairie, nor any of its contractors or staff, have been made
aware that they are the subject of a public prosecutor
investigation in Poland. Prairie is aware of a review of MoE
decisions issued by the former administration by Poland's current
Government.
Status of Jan Karski Mining Concession Application
Prairie remains on track to have its full application for a
Mining Concession submitted for Jan Karski during the period of the
Priority Right with major prerequisites for the application
substantially advanced. In Poland, a Mining Concession application
comprises the submission of a Deposit Development Plan ("DDP"), an
Environmental Social Impact Assessment ("ESIA") that is to be
approved by regional authorities and approval of a spatial
development plan (rezoning of land for mining use).
In May 2017, Prairie achieved a significant permitting milestone
following official approval by the Lublin Regional Mining Authority
of the Jan Karski DDP. Two months ago Prairie submitted all
applications required to change the local spatial development plans
to effect the rezoning of land for mining use, with the official
public consultation having now been completed. Prairie expects to
update the market regarding the outcome of the spatial planning
submissions in the coming weeks.
Furthermore, Prairie has substantially completed the ESIA for
Jan Karski and is expecting Environmental Consent during the second
half of 2017. Achieving these permitting milestones will fulfil all
of the regulatory pre-requisites for the Company to submit a formal
Mining Concession application.
Prairie notes that Bogdanka has unsuccessfully challenged
Prairie's rights to Jan Karski in the past. Bogdanka's claims have
been consistently and vigorously rejected by the Polish Courts and
also the Polish Government in multiple decisions. The MoE rejected
Bogdanka's Mining Concession application over K-6-7 and officially
rejected an appeal by Bogdanka following which the Administrative
Court in Poland upheld the MoE's decisions. It is beyond doubt that
Prairie has the exclusive Priority Right over Jan Karski. In fact
in March 2016, Poland's Chief National Geologist confirmed the
legally binding status of the Priority Right when he stated that:
"Binding law is constructed so that an entrepreneur that holds a
licence for prospecting or exploration of deposits after
documenting and being granted the geological documentation approval
decision, gains priority in being granted a mining concession".
Prairie has always conducted its business in Poland
according to the GML and continues to pioneer the application
of international standards for development and feasibility
work in Poland necessary to ensure the value of its
Tier One coking coal projects are maximised for all
stakeholders, meet the rigorous requirements for international
financing and can ensure the production of high quality
coking coal product to regional European steel makers.
Poland is multi-party representative democracy and has
been a member of the European Union since 2004. Prairie
Mining has been listed on the Warsaw Stock Exchange
since September 2015 and enjoys a strong and increasing
Polish shareholder base. The Prairie team responsible
for the development of the its two Tier One coking coal
projects consists of Polish experts, who account for
some 85% of the total team members, supported by international
experts. Prairie benefits from strong support of local
communities and regional governments, and our activities
are in line with Polish national government policy that
considers coal at the core of Poland's raw material
security, seeks to renew Polish industry and enhance
economic development in Eastern Poland, where the Jan
Karski Mine is located.
Furthermore, Poland enjoys strong relations with Australia
which includes more than $650m in annual trade between
the two countries. Australia also holds the status of
"Most Favoured Nation" with Poland and the countries
signed a Promotion and Protection of Investment Agreement
in 1991 (a Bilateral Investment Treaty) which provides
reciprocal protections for investments made by residents
and entities of both countries, including licences for
exploration and mining of natural resources.
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To view this announcement in full including all illustrations,
figures and maps, please refer www.pdz.com.au.
For further information, please contact:
Prairie Mining Limited Tel: +44 207 478
3900
Ben Stoikovich, Chief Email: info@pdz.com.au
Executive Officer
Sapan Ghai, Head of
Corporate Development
This information is provided by RNS
The company news service from the London Stock Exchange
END
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