david thomas - imc mining pty ltd - taroborah coal project – keeping it simple

TAROBORAH COAL PROJECT

KEEPING IT SIMPLE

Presentation to

14th Annual Longwall Conference

26 October 2015

Crowne Plaza Hunter Valley

Contents

Project Description

The Early Years – Landholders and Traditional Owners

Navigating the EIS Process – SCL and the Water Trigger

Proven Design and Local Content

Operational Management Issues – Sulphur and Spon Com

Project Description

Location

• The Taroborah Coal Project (TCP) is located approximately 22 km due west of Emerald.

• MDL 467, in which TCP is situated, is approximately 13 km in length (north to south) and 9 km in width (east to west) and encompasses an area of 7,966ha.

• Access to the TCP site is via the Capricorn Highway, which dissects the Project site from east to west.

Project Description

Location

Project Description

Geology

• The coal seams at Taroborah are contained within the Aldebaran Sandstone in the northwestern area of the Denison Trough, the westernmost trough of the Bowen Basin.

• The Taroborah deposit is located in a graben structure, bounded on the east and west by +60m displacement faults and the subcrop to the south. In the north, the seams thin and are eventually truncated by a major east-west orientated fault to the north of the tenement area.

• The top 2 seams (“A” and “B” seam) are the most developed and thickest and are probably equivalent to the Cetus and Cygnus seams in the Freitag Formation near Tieri.

• In total, the Taroborah deposit represents a resource of approximately 200 million tonnes.

Project Description

Resource Areas

Project Description

Primary Features

• The Taroborah Coal Project is planned to be an excavator and truck opencut operation initially, transitioning to an underground longwall operation after approximately 5 years.

• The opencut operations together with other surface based mine infrastructure would be located south of the Capricorn Highway, with the underground mine located north of the highway. Access to the underground is via the final opencut highwall in the northwest corner.

• Mined coal would be processed on-site, with ROM stockpiles, primary and secondary sizing facilities, coal handling conveyors, a small preparation plant, a product stockpile and a train load-out facility included in the design.

• Product coal will be transported by rail to Gladstone via the Central West and Blackwater railway systems.

Project Description

Proposed Project Layout

Project Description

Project Timeline

• Depending on project approvals timing and market conditions, construction start-up is envisioned in 4Q 2017.

• The initial construction period for establishment of the opencut mine, CHPP facilities, project utilities, water management structures and railway line upgrades is expected to last 12 months.

• Opencut mine excavation would commence after approximately 9 months, with first coal production in 4Q 2018. The opencut is expected to reach full production capacity of 2.0-2.3Mtpa ROM by 2020 (Year 3) and operate at that level through 1Q 2024.

• The underground mine construction period would begin in 2022 and is expected to last 6 months.

• The underground longwall operation is expected to reach full production capacity of ~5Mtpa by 2025, and operate at that level through 1Q 2038.

The Early Years - Landholders

• EPC1011 was awarded to Shinelia Holdings Pty Ltd, the Australian agent for the Henan Shenhuo Group of China, in early 2006 following acceptance by the Queensland Government of the competitive tender developed by IMC for exploration rights over a portion of RA290.

• Shinelia undertook unauthorised exploration on EPC1011 in September and October of 2006, resulting in legal action that halted site activities for almost 2 years. No rehabilitation of the 45 drill sites completed by Shinelia was undertaken during this time.

• Upon resumption of activities in 2008, disgruntled landholders demanded compensation from Shenhuo International Group, the new Australian entity of Henan Shenhuo, for the damage left by past activities.

The Early Years - Landholders

• While not legally obligated for anything other than rehabilitation of the previously disturbed areas, Shenhuo solicited compensation requests from the affected landholders in order to show a willingness to cooperate with them and appease their disgruntlement.

• Following further negotiation with each landholder, compensation agreements equitable to all parties were reached.

• This early willingness of Shenhuo to go beyond their legal and statutory obligations has paid great dividends as the project has progressed, resulting in:

good cooperation from landholders during subsequent exploration;

later, statutory compensation agreements for exploration activities being far less onerous and costly than those experienced by many others; and

little to no opposition during the EIS process.

The Early Years – Traditional Owners

• From review of 2006 field notes of the Shinelia Cultural Liaison Officer, it was clear that there was considerable animosity between the Traditional Owners and Shinelia during and following the initial exploration works.Further, Shinelia failed to pay for the final field survey.

• This resulted in initial scepticism and some animosity of the TO’s and their agent toward Shenhuo when they resumed ownership in late 2007.

• As the Shenhuo management team realised the importance of working with the TO’s rather than against them, a face to face meeting with the TO’s and their agent to clear the air and convey this willingness to work with them was requested early on in the process.

• This initial show of respect to the TO’s enabled us to form a good rapport with the elders and field STOFO’s and resulted in a cultural heritage mitigation agreement that was fair and equitable for both parties while allowing for maximum flexibility and survey productivity.

The Early Years – Traditional Owners

• The result of the flexible mitigation agreement was a doubling in clearance survey productivity in 2008 and 2009 compared to 2006.

• Further, because of the rapport and trust built up in the first 3 years of Shenhuo’s control of the tenement, a new mitigation agreement was negotiated in 2011 that removed the agent and allowed direct engagement of the TO’s through their own management body.

• This direct engagement process has provided for further flexibility during mitigation works as well as increased revenue for the TO’s and a reduced cost to Shenhuo.

Navigating the EIS Process - SCL

• The EIS process for Taroborah was initiated in September 2011, with the Draft Terms of Reference submitted in January 2012 and the Final TOR released in August 2012.

• Shortly after release of the Final TOR, the QLD government introduced the Strategic Cropping Land (SCL) legislation in December 2012 as part of the new Regional Planning Act.

• The SCL legislation prohibits permanent disturbance of priority SCL areas and requires compensation for permanent disturbance of potential SCL areas.

• Taroborah fell into the latter category, with mapped potential SCL area located south of the Capricorn highway where the opencut and mine infrastructure area is planned to be located.

• Because of this, the EIS was expanded to include an assessment of the potential SCL areas to validate their designation as SCL.


• Two methods of SCL validation were contained in the original SCL legislation:

o Assessment of the soil properties against 8, defined SCL criteria.

o Assessment of recent cropping history (last 10 years).

• Both methods were pursued at Taroborah, particularly as there was no cropping history in a large part of the mapped potential SCL area.

• Assessment against the 8 soil properties confirmed that the vast majority of mapped potential SCL could be classified as such, although some areas were marginal in this regard.

• While the cropping history of the eastern portion of the originally planned opencut pit extents was sure to fail the test as it had recent cropping, the remainder of the mapped area of concern had never been cropped.


• Unfortunately, the cropping history test was required to be applied based on land management units (i.e. whole properties) as opposed to isolated within these units.

• Therefore, the area of major concern for Taroborah, the MIA, failed the cropping history test because the properties that the MIA is sited within have had limited recent cropping, albeit 2-6 km away, as illustrated in the next slide.

• New legislation introduced in June 2014 has removed the cropping history test from the SCL assessment methodology.

Navigating the EIS Process –Water Trigger Act

• In June 2013, the Federal government introduced the Water resources -2013 EPBC Act amendment, the so called Water Trigger act.

• Taroborah became subject to this new legislation mid-stream because it was considered a “large” coal mine development, the definition of large being "any coal mining activity that has, or is likely to have, a significant impact on water resources (including any impacts of associated salt production and/or salinity), in its own right or when considered with other developments, whether past, present or reasonably foreseeable developments."


• Of course the definition of “significant” is not prescriptive and relies on a subjective assessment of whether or not there is a real or “not remote” chance or possibility that the project will directly or indirectly result in a change to the hydrology or quality of a water resource that is of sufficient scale or intensity as to reduce the current or future utility of the water resource for third party users, including environmental and other public benefit outcomes, or to create a material risk of such reduction in utility occurring.

• Needless to say, with the above language as the cornerstone of the legislation, virtually every coal project undergoing or planning to undergo the EIS process was subject to the Water Trigger act.


• The fact that Taroborah was flagged by the Water Trigger act was not a surprise in and of itself as it was always acknowledged by the Shenhuo team that the mine’s impact on the local, isolated aquifer would be an issue to the local landholders.

• What was of concern was the publication of the final assessment report by the Independent Expert Scientific Committee (IESC) on their website that was never presented to Shenhuo in draft form for comment or factual verification prior to publication, and which contained some fundamental misinterpretations of the site hydrology that were potentially damaging to the project.

• Knowing that this public document on the IESC website would likely be subject to scrutiny by activists during future project approvals without bothering to view Taroborah’s own website, Shenhuo sought recourse with the DoE to publish a response document on the IESC website.


• Although publication of the Shenhuo response on the IESC website was not allowed, the DoE did consent to publishing the response on their own website and including a link to the response on the IESC website.

• While it remains to be seen if this action will ultimately result in easing the process for the granting of an Environmental Authority and Mining Lease, there is little doubt that Shenhuo’s proactive response helped pave the way for approval of the EIS and the setting of reasonable conditions around water resources for the project.

• Further, it is hoped that this action will encourage present and future projects in the same position to take this same, proactive approach instead of playing on the defensive side of the argument.

Proven Design - Opencut

• The deposit size and recoverable reserve base of the opencut area provides a perfect opportunity for a small to medium sized contractor to employ a standard hydraulic excavator and truck mining method to recover the coal.

• It is likely that the overburden will be removed using up to three, 500t class excavators, which will load up to fifteen 190t capacity rear-dump trucks.

• Coal mining will be undertaken utilising a 150t class hydraulic excavator, a circa 7m3 front-end loader and up to three 90t rear-dump trucks.

• Other support equipment will include standard blast-hole drill rigs, water carts, track and rubber-tyred dozers, graders and ancillary light vehicles.


• Open-cut production will commence with mining of the lowest strip-ratio blocks (southwest sector of the pit), followed by progressive mining of the higher strip-ratio blocks (north and east sectors of the pit). Within three years, ROM coal will be mined at a rate of 2Mtpa, with a peak production of 2.28Mtpa expected.

• The coal seams will be selectively mined and processed due to varying sulphur content, with the A seam and the 0.5m thick B Tops seam section mined separately and washed to reduce sulphur concentrations. In contrast, the B Bottoms seam section (representing about 58% of the in situ coal) will generally not require washing in order to achieve its thermal coal specification for export.


Mine Progression – Year 1

Proven Design - Underground

• Following completion of the western sector of the opencut pit, an underground mine portal will be developed via the highwall in 2021 (Year 5), in order to gain access to the underground resource. It is anticipated that the first development coal will be extracted 6 months later.

• Due to the close proximity of the coal seams to each other, and because of its greater thickness and superior quality, only the B seam is targeted for underground mining. Further, in order to minimise the amount of underground mined coal that needs to be washed, mine extraction will be limited to only the B seam section that generally provides for a <1% sulphur ROM product. Based on exploration to date, approximately one-half of the targeted underground mine area will be restricted to the B Bottoms seam section, with the full B seam section mined elsewhere.


• Standard miner/bolters with two roof bolters and two rib bolters are envisioned due to their flexibility as the competent sandstone roof and moderate mining height (2.5-3m) minimises the ground support required to be installed on development.

• Longwall panels are currently designed at 300m wide and up to 4500m in length, as allowed by the boundary fault constraints.

• Longwall operations will occur in height range of 2.5-3m and utilise the latest, proven automation available at the time of installation.

• A conservative annual output of around 5 million tonnes is expected, partly due to transport constraints created by a 20TAL for train movements (i.e. 3 trains per day through Emerald considered maximum acceptable for approvals).


Mine Extraction by Year

Proven Design - CHPP

• ROM coal from the opencut pit will be either directly dumped, or stockpiled for later transfer, into a 200t live-capacity ROM hopper for primary sizing. The top size of this material will then reduce down to 50mm via a secondary sizing station. Sized material will be directed to either the “wash” or “bypass” streams, based upon coal type and quality (e.g. sulphur concentration).

• The wash stream coal will be delivered to the CPP feed stockpile. The plant feed stockpile will provide 5kt of surge capacity in order to accommodate opencut mine sequencing. In contrast, bypass coal will be conveyed directly to the product stockpile.


• Underground ROM coal will be transported to the surface and stored in a 50kt conical stockpile. This material will then be transferred to the secondary sizing station, combined with bypass-stream opencut ROM coal as appropriate, and conveyed directly to the product stockpile if sulphur levels meet product specifications, or to the CPP stockpile if washing is necessary.

• Coarse rejects from the CPP will be dried and fine rejects produced by the CPP will be partially dewatered, with the thickener underflow being directed to a belt press filter before being conveyed to the 100t rejects bin to join the coarse rejects and disposal in the spoil dumps.


CHPP Flow Diagram


CHPP Layout

Local Content

• The Project’s main employment strategy is to source employees for both the construction and operational phases of the Project from the Emerald area. However if all of the skills and experience required for all phases of the Project cannot be obtained locally, then staff will be sourced regionally.

• During construction and production, no camps will be established on-site or in Emerald. All contractor and operational staff will live in Emerald or the surrounding region, either permanently or in existing/already proposed temporary accommodation while on roster.

• Housing staff in the region will help the workforce to integrate into the local community, contribute to the local economy and enhance the level of participation in local activities connected with community objectives.

Local Content

• Staff will be encouraged to use the Emerald BIBO service to and from the Project site, rather than make their own way to site, to minimise potential road safety issues, particularly driver fatigue.

• An Emerald housing study conducted for this EIS found that an adequate volume of rental and privately purchased housing for both construction and operational staff exists in the local area. Therefore, the proposed accommodation strategy is not expected to apply significant upward pressure on housing availability or affordability.

• Local businesses will also be sought out to provide goods and services to the project in the first instance.

Management Issues – High Sulphur

• As rejects from the coal preparation plant and some of the overburden from the opencut contains a high sulphur content, acid mine drainage will be a management issue for opencut operations.

• Management strategies to be employed include:

o Selective mining and placement of PAF overburden in the inner portions of out of pit dumps or below the water table in the in pit dumps, surrounded by NAF overburden material to minimise the exposure to oxidation.

o Use of crushed limestone on individual lifts and dump facings to provide additional acid neutralising capacity.

o Placement of CPP rejects in engineered cells that will be clay lined and encapsulated in the waste dumps.

Management Issues – High Sulphur

In-Pit Spoil Dump Design

Out-of-Pit Spoil Dump Design

Management Issues – Spon Com

• Due to the high pyrite content of the A seam and the B Tops seam section, spontaneous combustion will be a significant management issue for both the underground and opencut operations.

• Management strategies to be employed for spontaneous combustion include:

o Surface stockpile volumes to be kept as low as possible to minimise the time that the coal is allowed to incubate. Stockpile surfaces to be compacted if volumes expected to remain for more than 24 hours.

o Proactive inertisation of longwall goaves, which will contain B tops and A seam material, to maintain an incombustible atmosphere.

o Longwall design allows for a fire barrier between every fourth panel to minimise “active” goaf area.

david thomas - imc mining pty ltd - taroborah coal project – keeping it simple

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