Poplar Grove Mine (Buck Creek No.2 Mine), Kentucky, United States of America


Poplar Grove

Earlier known as Buck Creek No.2 Mine, Poplar Grove Mine is located within the Buck Creek mine complex in the Western Kentucky region, Illinois Basin, US.

Paringa Resources acquired the Poplar Grove mine in 2013, along with its adjacent coal lease, Cypress Mine (formerly called Buck Creek No.1 Mine), located within the complex.

The scoping study for the Poplar Grove project was released in February 2016. The results of the study demonstrated that the project will be a high-margin mine with low capital expenditure of $44m.

A bankable feasibility study (BFS) of the project was commenced in April 2016 and is due for completion by the end of March 2017.
Paringa received Surface Mining Control and Reclamation Act (SMCRA) permit to develop the mine in March 2017. Construction works are scheduled to begin by mid-2017 and continue for 12 months.

The mine is expected to produce 1.8Mt of coal a year over its 20-year lifetime.

First coal from the mine is expected in the second quarter of 2018, while commercial production is scheduled for Q3 of the same year.

Background to Poplar Grove mine development

The No.1 Mine was Paringa's only priority when the company acquired the coal leases in Buck Creek. Subsequent drilling and acquisition of additional coal leases, however, led to the discovery of a new section of coal, which is now called the Poplar Grove mine, to the south of the No.1 Mine area.

On further evaluation of the Grove mine, various factors, including its favourable geology, shallow depth of the Western Kentucky No. 9 (WK No. 9) coal seam and shorter construction period, made it easy to develop at low capital expenditure (capex) compared to the shovel-ready Mine No.1.

"The mine is expected to produce 1.8Mt of coal a year over its 20-year lifetime."

Paringa then amended its staged development strategy by prioritising the development of Mine No.2 over Mine No.1.

Another contiguous coal seam, the Western Kentucky No.11 (WK No.11) coal seam, was discovered at Poplar Grove, just above the WK No.9 coal seam in October 2016. The new seam again transformed the economics of the Poplar Grove Mine by increasing the amount of available resources.

Poplar Grove Mine reserves

As per the updated coal resource estimate (CRE) released in February 2017, which also includes coal from the newly discovered WK No.11 coal seam, Poplar Grove is estimated to contain total indicated and measured resources of 118.5Mt.

Recording 62% increase from the previous estimate, the CRE includes 46.3Mt of measured and 72.2Mt of indicated resources.

The inclusion of new coal seam also increased Paringa's total coal resources at the complex by 30% from 251Mt to 328Mt.

Mining and processing at the high-quality coal mine

Room-and-pillar mining method is proposed to mine the deposit. Access to the mine will be created by a combination of box cut and drift methods due to the shallow depth of the coal seam.

The box cut method will create a rectangular excavation from the original surface and will also have a series of decline drifts developed through the rock from surface to access the coal. Also proposed are four drifts at the bottom of the box cut for exhaust, conveyor and vehicle entry air portals.

Coal will be mined from two continuous miner super-section units, each featuring two continuous miners, two roof-bolting machines, and four battery haulers. Other support equipment includes scoops, supply cars, battery or diesel-powered rubber-tired equipment, and rail-rubber cars.

The coal preparation plant will have a design throughput capacity of 400t a year, enabling the mine to produce an average of 2.3Mt of run-of-mine (ROM) coal a year.

Infrastructure at Buck Creek No.2 Mine

A driveable ramp will be constructed for conveyor belt operations and transporting supplies and equipment to the mine's operating areas. The main conveyor will transfer raw coal into a stockpile, while rubber-tired supply cars will carry supplies and other equipment to the operating areas of the mine.

Power to the mine will be supplied from a 69kV transmission line, which will be constructed approximately three miles away from the project site. Another main surface substation is also planned along with internal distribution lines to supply power to the mine, processing plant and surface facilities.

Water for the plant operations will be supplied from the Green River and will be stored in a freshwater supply tank located adjacent to the surface facilities. Potable water will be supplied from existing public water supply infrastructure.

Coal off-take agreements

Paringa signed coal sales agreements with Louisville Gas and Electric Company (LG&E) and Kentucky Utilities Company (KU) for the No.1 mine and is now transferring the same to the Poplar Grove mine.

The $220m agreement involves delivery of 4.75Mt of coal over a five-year period, with 750,000t to be delivered in 2018 and 1Mt a year to be delivered from 2019 to 2022.

Financing

The estimated total investment for the project is $44.4m, which will be used for purchasing surface property, mine development, construction of processing plant and barge load-out and surface facilities.

Paringa raised A$8m ($6.18m) through a private placement of 19 million shares subscribed by institutional investors. The proceeds will be used to complete the BFS of the project and to commence the development of the mine.

Consultants involved

The scoping study for the project was managed by Cardno with the help of local industry consultants. The project's BFS is also being managed by the same company.