(MENAFN - ProactiveInvestors - Australia) New Horizon Coal (ASX:NHO) has concluded a positive prefeasibility study at its Kinney coal project in Utah, which confirms the project's technical and economic viability to produce a high calorific, low sulfphur coal.
The study was done by John T. Boyd Company and it defined a JORC compliant 16-year life of mine for the Kinney Coal project at a run of mine annual production level of 2.3 million tonnes per annum.
The project has low capital development costs with an initial outlay of US63 million and rapid development timeline as well as attractive cash operating costs of US32 per tonnefor the initial life of mine reserve base.
A further capital investment of 53 million will be required to take the project to its full production of 2.3 million tonnes.
Together with strong estimated cash flows of 45.9 million per annum once production starts, this makes for attractive terms for payback.
The project could also benefit from its ready access to infrastructure and underutilized rail network.
The company will continue to build on this study with a bankable feasibility study likely to commence in calendar year 2013.
The company also plans a rapid production development schedule with full production likely within 3 years of initial drift access and Hiawatha seam development.
Its plans to get into production are also likely to be aided by its planned letter of intent with a new, permitted port facility to secure a multi year export allocation.