Paringa executes $220m worth coal sales agreement

18 October 2015 (Last Updated October 18th, 2015 18:30)

Australia-based Paringa Resources has signed a $220m deal with PPL’s subsidiaries Louisville Gas and Electric (LG&E) and Kentucky Utilities (KU) for future coal sales from the proposed Buck Creek No.1 Mine in the US.

Australia-based Paringa Resources has signed a $220m deal with PPL's subsidiaries Louisville Gas and Electric (LG&E) and Kentucky Utilities (KU) for future coal sales from the proposed Buck Creek No.1 Mine in the US.

Under the agreement, Paringa will deliver a total of 4.75Mt of its 11,200btu/lb product for a period five years.

In 2018, 750,000t will be delivered, with another 1,000,000t supplied each year from 2019 to 2022.

Paringa Resources president and CEO David Gay said: "The contract is the culmination of over a year of due diligence, negotiations, documentation and approvals on both sides."

"Full production of 3.8 million tonnes per annum is expected around 2020."

According to Paringa, the coal handling and preparation plant of the mine has been redesigned as part of a pre-feasibility study (PFS) released in March 2015.

Production at the Buck Creek No.1 Mine is due to start in 2018, with full production of 3.8Mtpa expected around 2020.

Paringa said that the contracted fixed coal sales prices for its 11,200btu/lb coal spec begins at $44.50 per tonne in 2018, which may increase to $48.20 in 2022.

The latest agreement includes standard project development milestones that are in line with the proposed Buck Creek No.1 Mine construction programme.

During construction, LG&E and KU will monitor the company's performance in meeting the milestones and may terminate the agreement in case should it fail to achieve the agreed milestones.

Located in the Western Kentucky region of the Illinois Coal Basin, the Buck Creek Mining Complex has a JORC measured and indicated coal resource estimate of 211mt of thermal coal.

The complex is located next to the Green River, which provides year-round linkage to the Ohio and Mississippi rivers systems that feed domestic coal-fired power plants and coastal export coal terminals in the Gulf of Mexico.