Initial Work Identifies Early Cash Flow Opportunities
Montem Resources Limited (ASX: MR1) has completed a Scoping Study on the Chinook Project in Alberta, Canada, which has identified its potential as multi-mine coking coal producer.
Managing Director and CEO, Peter Doyle, said the company will now execute plans to conduct additional drilling, engineering and environmental work to produce a Prefeasibility Study for Chinook.
The project construction timing will be assessed in detail as part of the Pre-Feasibility Study however Montem anticipates the Tent Mountain Mine re-start will be well underway. The company intends to re-invest cash flow from Tent Mountain Mine into the startup of the Chinook Project.
“We are pleased to have completed this Scoping Study which identifies the potential to realize cash flow from surface mining within the Chinook Project. We have focused on Chinook as it sits in Category 4 lands and has the advantage of brownfield development,” Mr Doyle said.
“The Board believes the positive result from the Scoping Study underscores our potential to be a multi-mine hard coking coal producer. We will now execute plans to conduct additional drilling, engineering and environmental work to undertake a Prefeasibility Study for Chinook.”
The Scoping Study was undertaken as a desktop exercise by specialist consultants, including RPMGlobal and Sedgman Canada Ltd. It expanded on earlier conceptual mine planning work completed by Montem in 2018 and 2020 and identified multiple zones of low-ratio mineable hard coking coal, suitable for open-cut mining.
Access to Chinook is via sealed and unsealed roads, directly from Highway 3 and Highway 40, while the main rail line, operated by Canadian Pacific Railway, travels through the Project connecting to Westshore Terminals in Vancouver for coal exports.
The Project contains a number of historical open cut and underground mines. Combined, these mines were in production from the early 1900’s until the late 1970’s.
Dahrouge Geological Consulting Ltd has estimated the project contains total Indicated and Inferred Resources (in situ) of 149.1Mt (Measured 0.0Mt; Indicated 103.8Mt; Inferred 45.3Mt), and an Exploration Target of 125-450Mt for the Chinook Project in accordance with the JORC Code.
A separate review of the coal quality found that the majority of the coal at Chinook Vicary is good quality Hard Coking Coal, with FSI of 6 – 7 and CSR above 55. Minor portions of the resource, limited to seam S4/4A, report FSI below 6 and CSR below 50. Most of the coal at Chinook South is classified as a Semi Hard Coking Coal, with less than 10% deemed suitable as a Hard Coking Coal.
The Scoping Study adopted a truck and shovel mining method the multiple seam, steeply-dipping coal horizons in the undulating terrain of Chinook. This is considered to be an appropriate mining method for this style of deposit and one that is commonly used in nearby Teck Resources Ltd mines of Elkview, Line Creek, Greenhills and Fording River to the west of Chinook and also proposed by Montem at its nearby Tent Mountain Mine.
The Chinook Project mine financing is planned to be achieved through a mix of equity and debt. The equity portion is planned to be made from cashflow Montem anticipates available as the result of selling coal from the Tent Mountain Mine. Montem is undertaking a restart at the Tent Mountain Mine, with planned coal sales beginning in 2022/23. The Chinook Project is anticipated to start approximately 5 years after the Tent Mountain Mine re-start.
