Cypress Mine (Buck Creek No.1 Mine), Illinois Basin, Western Kentucky, United States of America


BuckCreek No.1 Mine

Cypress (formerly Buck Creek No.1) mine is located within McLean and Hopkins Counties, approximately 280km south-west of the city of Frankfort, Kentucky. The project forms part of the larger Buck Creek Mining Complex.

Paringa Resources is the 100% owner of the Buck Creek Mining Complex, which will be developed in stages. Results from the scoping study for the Poplar Grove mine (Buck Creek No.2) declared in February 2016 demonstrated that it is capable of producing 3.8Mt annually with a capital expenditure of $105m.

The pre-feasibility study (PFS) for the Cypress mine development was completed in March 2015 followed by the completion of bankable feasibility study (BFS) in December.

Due to the favourable geology and low CAPEX of the Poplar Grove mine, Paringa has prioritised its development over the Cypress mine. Construction works are scheduled to start following completion of construction at the Poplar Grove mine in early 2019 and first production is anticipated in early 2021. The mine is estimated to have a production life of 18 years.

The overall investment in the project is estimated to be $105m, with $61m of this used for the mine site development and infrastructure, while the remaining $44m will be used for the construction of the coal handling and preparation plant (CHPP) and a barge load-out facility. The project will be financed through debt and equity.

Geology at the Cypress Mine

"Paringa Resources is the 100% owner of the Buck Creek Mining Complex, which will be developed in stages."

The project is located in the Western Kentucky region of the Illinois Basin (ILB), where the thickest and most continuous coal seams, including the associated WK No. 9 seam, are found in the Carbondale Formation, which hosts shale, sandstone, siltstone and limestone, as well as fireclays and coal to a lesser extent.

The WK No. 9 seam dips 2° to 3° degrees on average towards the centre of ILB, which lies on the north-west portion of the property. The average mineable seam thickness ranges between 0.91m (3ft) and 1.37m (4.5ft).

Cypress mine reserves

The Poplar Grove and Cypress mines are estimated to contain proven and probable reserves of 135.7Mt.

Mining and processing at Paringa's thermal coal mine

Underground room-and-pillar mining method with continuous miners has been selected for the coal mining project. There will be four super-section units, each equipped with two continuous miners, four battery haulers, a feeder breaker, two dual-head roof bolting machines, scoops, supply cars, rockdusting and ancillary facilities.

The CHPP will have a processing capacity of 5.1Mt a year of run-of-mine (ROM) coal. It is designed to produce both a fully washed (30%) and blended (70%) product from the project.

Infrastructure for the Western Kentucky coal mine

An 18ft-wide and 16ft-high mine slope connecting the surface to the coal seam will be constructed for the transport of personnel, equipment and ROM coal. It will be equipped with a conveyor belt, a route for transportation of personnel and equipment, and a two-compartment vertical shaft for mine ventilation.

The barge load out facility will be constructed in the Green River, two miles north-east of the processing plant.

Electricity for the project will be supplied to a new substation onsite by means of existing transmission and distribution lines owned separately by Kentucky Utilities and Big Rivers Electric Corporation. Freshwater will be sourced from the barge load-out facility on the Green River and potable water will be sourced from the local public system supplied by the City of Calhoun.

Other major infrastructure will include mine fans, escape hoists, materials handling facilities, an overland conveyor belt connecting the mine to the barge load out facility, water tanks, a helipad, and buildings housing the main office, a shop, a warehouse and a bath house.

Production and sale of coal from Cypress mine

Based on the reserves, the mine is estimated to produce an average ROM coal at a rate of 5.1Mtpa and average saleable thermal coal production rate of 3.8Mtpa.

Paringa secured a $220m, seven-year coal sales agreement covering an initial two-year construction period (2016 to 2017) and a five-year production period (2018 to 2022), with Louisville Gas and Electric Company and Kentucky Utilities Company (LG&E and KU), in October 2015. The agreement has now been transferred to the Poplar Grove mine.

The company also plans to sell some of the coal to local utilities who operate scrubbed coal-fired power plants along the Ohio River Market, and further targets to sell part of the coal to the south-east market.

Key players involved

The BFS was compiled by Cardno with assistance from Alpha Engineering Services for the modelling and design of the mine ventilation, Strategic Energy Resolutions for market assessment and preliminary marketing plan, Hanou Energy Consulting for the market price forecasts, Appalachian Mining & Engineering for ground control design, and Keystone Mining Services for ground control analysis and slope design. The PFS was also compiled by Cardno.

The preliminary design and cost estimation for the preparation plant were performed by General Mine Contracting, Powell Companies and Robertson Process, the preliminary design and cost estimation for the electrical system were provided by William E. Groves Construction, Robertson Process and T&D Solutions, while the preliminary design and cost estimation for the slope and shafts were provided by Cowin & Company and Frontier Kemper Mining Construction.

Associated Engineers handled the permitting information and surveying aspects, while exploration core drilling services were rendered by Magnum Drilling Services, Hawkey & Kline Coring & Drilling and 3D Dycus Diamond Drilling, and the analytical laboratory testing services were provided by Standard Laboratories, SGS North America and Precision Testing Laboratory.