With Bandanna now having more than 1,600 million tonnes of JORC Compliant coal resources, the Company has focused on infrastructure development. To this end Bandanna is participating in two quite independent, infrastructure, scenarios focused on future coal export out of the ports of Abbot Point and Wiggins Island, making it unique amongst the Queensland-based thermal coal explorers and developers.
Bandanna’s Bowen Basin key projects, with more than 1,000 million tonnes of JORC related resources and reserves, are all located close to the Bauhinua and Blackwater rail corridors which are the principal rail supply lines connecting to export ports at Gladstone. Gladstone Port Authority recently approved Stage 1 construction of the new Wiggins Island Coal Export Terminal (WICET) for which Bandanna has a 4 Mtpa capacity allocation.
Galilee Basin Infrastructure
Bandanna is the only ASX-listed company with coal mine development plans within the Galilee Basin, at its South Galilee Coal Project where it Joint Ventures with AMCI. With major developments proposed immediately to the north of our South Galilee Project, by Hancock Prospecting/GVK and Waratah/Resource House, the Galilee Basin will become a new globally-significant source of thermal coal, with estimates that the Basin could provide enormous resources for many decades to come. Key proponents in the Galilee Basin, including the South Galilee Coal Project JV, in which Bandanna has a 50% interest, see future export of coal achieved through a supply chain involving the construction of an Approximate 500 km standard gauge heavy duty rail line connecting the proposed source mine to Abbot Point export facilities, located near Bowen.
Although there is a direct rail connection between Gladstone and the township of Alpha the common industry view is that west of Emerald the rail is, because of its narrow gauge and light load capacity, unsuitable for the large movement of coal. Moreover, Galilee coal output would put too large a strain on throughout at Gladstone as it develops to serve greater coal output from the central Bowen and Surat basins as well as facilitate future shipping movements for the proposed Curtis Island LNG development.
Currently there are no coal mines in the Galilee Basin nor is there any rail connection to Abbot Point. However, and importantly, the most advanced project proponents in the Basin, Hancock Prospecting/GVK and Waratah/Resource House, have indicated their preference to see a rail connection to Abbot Point. Other proponents, such as Adani, have suggested additional rail options including connections to Dalrymple Bay as well as Abbot Point. Recently QRN suggested the construction of a 200 km extension of its narrow gauge rail network from Blair Athol, an option which could potentially open up access to a number of northern ports both on a shorter time scale and with significantly less capital.
The Queensland Government favours a private consortium approach for the construction of rail and of new coal port facilities at Abbott Point including third party access. In September 2011 Hancock Prospecting advertised seeking third party expressions of interest in access to their proposed rail corridor development to Abbot Point.
The Queensland Government has set aside $800 million for the development of the Conners River dam and for a large diameter pipeline to provide water to Moranbah and then to the Galilee Basin through Sunwater, as part of its commitment to assist in infrastructure development. AMCI and Bandanna are participants in this development.
The South Galilee Coal Project Joint Venture has and will continue to monitor and participate in various stakeholder negotiations concerning future regional infrastructure planning and development of the Galilee Basin coal resources at a level commensurate with its status as a significant stakeholder. The Joint Venture views the development of key regional infrastructure and third party access as vital to the future development of the South Galilee Project.
Bowen Basin Infrastructure
Wiggins Island Coal Export Terminal (WICET)
As announced to the ASX on 30 September 2010, Bandanna was included in Stage 1 of the proposed Wiggins Island Coal Export Terminal (WICET) development at Gladstone. WICET will be developed beside the RG Tanner Terminal which is the main coal export terminal at Gladstone.
In all, eight coal producers have committed to a total 27 Mt pa capacity allocation for Stage 1 of the WICET development, an industry sponsored development which will ultimately see an expansion of the Gladstone port facility by at least some 70 to 80 Mtpa.
Bandanna became a shareholder in WICET Holdings Pty Ltd, an industry owned consortium with the State Government mandate to develop Stage 1 of WICET. Financial close of WICET was announced to the market in early October 2011 following sucessful completion of the project financing through the ANZ Bank as lead arranger.
At that time:
- Bandanna, as an owner shareholder in Stage 1, has a 4 Mtpa allocation, representing 14% of the total 27Mtpa capacity.
- First coal is due for export through WICET in mid 2014, following a planned 34 month build.
- Bandanna is fully funded to meet all its obligations to the port including a bank guarantee for $52 million under the Take or Pay Agreement.
- Its pro-rata share($41 million) of total preference equity of $275 million funded by the eight Stage 1 proponents, represents the only user funding component.
- Bandanna to make no further capital contributions for the budgeted construction cost as funded under the $2.5 billion privately funded financing package of senior and subordinated debt arranged by ANZ bank.
Rail
As a condition precedent to WICET financial close, Bandanna, together with all other Stage 1 proponents, announced in early September 2011 that it had entered into a commercial agreement with QR National (QRN) whereby QRN will construct and fund the $900 million Wiggins Island Rail Project (WIRP) to provide the necessary rail infrastructure to ensure rail connection for the proposed source mines. Under the WIRP development, the rail infrastructure will align with the WICET Stage 1 commissioning. As part of its Access Agreement, Bandanna will pay a charge to access the Blackwater corridor once upgraded.
Following Financial Close Bandanna has now in place a definite supply chain solution for its source mine development in the Bowen Basin. In order to cement further mine developments Bandanna has also:
- Submitted an expression of interest for a 5 Mtpa allocation in WICET Stage 2a which is expected to commence some 18 months after Stage 1.
- Obtained a further 6 Mtpa of nominated annual capacity under the Feasibility Funding Facility Agreement, which with its already 2 Mtpa, means that it is in a good position to be able to gain priority in any Stage 2a allocation process in the event that there is more demand than the nominal 30 Mtpa.
- Indicated its interest in obtaining an allocation in WICET Stage 2b, which will be another nominal 30 Mtpa, expansion.