The Dingo West Project consists of EPC 881 and an application for Mining Lease (MLA 80180). These are currently held 100% by Dingo West Coal Pty Ltd, which is a wholly owned subsidiary of Bandanna. Coal quality data indicates a potential PCI/thermal product in a geological setting, not dissimilar to the nearby Yarrabee and Jellinbah mines. Complex geology make Dingo West more amendable to development via a number of smaller satellite pits rather than a single large open cut mine. Production is anticipated to be within the 500,000 tpa to 1 Mtpa range. Subject to approvals processes, first production may occur in early 2013.
Location and Infrastructure
The project area is located around, and to the west of, the township of Dingo in central Queensland. The area has excellent infrastructure, with a high capacity rail link and the Capricorn Highway both traversing the permit. It is closer to the RG Tanner and Barney Point coal terminals at Gladstone port than any currently operating mine serviced by the Blackwater rail corridor.
Map - Location of EPC 881, Dingo West
Previous Exploration
The area has been explored by several companies over the last thirty years, including Mt Morgan, J.A.B.A.S Pty Ltd and New Hope Collieries. Bandanna commenced its exploration program in May 2007. Exploration effort has now focused on a number of potential satellite pit locations which were identified following seismic programs and drilling up to 2010. During the 2011 financial year over 2000 metres of drilling was undertaken, including 17 cored drill holes.
Resource Estimate
In June 2008 the estimated Inferred Resource within EPC 881 totaled 91.1 Mt (Refer to Table of Resources and Reserves and Compliance Statement) of low volatile thermal coal at a strip ratio of less than 20:1 of which 56.7 Mt is at a strip ratio of less than 12:1. Additional drilling has been undertaken to better define individual pit locations for further mine development.
Coal Quality
There is only limited raw coal quality data available from the drilling results, although the data shows some very favourable characteristics. The ash content of a potential raw thermal product varies from 10.2 – 15.4% (adb), (washed product probably around 8.5%), sulphur ranges between 0.47-0.99%, volatile matter 13-15% and typically the coal has a good specific energy 6990 kcal/kg(gar) and 7650 kcal/kg (adb). HGI of around 85 means that the coal is “soft” and easily milled (pulverized) in a PCI plant.
Future Development
During the 2011 Financial Year a feasibility study was completed. Exploration drilling was on-going with locations determined by a 2D seismic survey undertaken during late 2009 and early 2010. Environmental referral has been submitted to the Federal Government and State Governments and terms of reference are currently being finalized.
The feasibility study indicated strong project economics (NPV >$200 million) with life of mine FOB operating costs of circa $85 /tonne (excluding government royalties) and with a total development capital cost of approximately $135 million including wash plant.