The Donkin coal project is an underground mine located on the north-eastern tip of Cape-Breton, Nova Scotia. Cline Group affiliate Kameron Collieries (Kameron) is the owner and operator of the coal mine.
Kameron acquired a 75% interest in the project from Glencore in December 2014 and in January 2015, it purchased the remaining 25% interest from Morien Resources under a $5.5m definitive purchase and sale agreement.
Production from the first continuous miner at Donkin commenced in February 2017, while the coal handling, preparation and processing plant (CHPP) was installed in September 2017.
With an estimated mine life of more than 30 years, the project was anticipated to produce 3.6 million tonnes per annum (Mtpa) of run-of-mine (ROM) coal and 3Mt of saleable coal.
In March 2020, Kameron announced its decision to cease production activities at the Donkin mine due to unfavourable geological circumstances. The mine was not sealed and no mining equipment has been removed from the location. The mine is operated for an indeterminate amount of time by a small workforce to ventilate and keep the operation dewatered during an idled care and repair process.
Donkin coal project location and geology
The project is situated approximately 28.5km east of Sydney in Cape Breton, which falls within the Sydney Coalfield of Nova Scotia.
A large coal basin of Carboniferous age, the coalfield extends towards north and northeast from the northern part of Cape Breton Island under the Atlantic Ocean towards Newfoundland. The landward portion of the coalfield comprises less than 5% of the total coal measure sequence.
The mine is classified as a low-type A structural complexity. The resource block extends over an area of approximately 100,000ha.
The Donkin area hosts up to 11 coal seams, of which three seams, namely Lloyd Cove; Hub; and Harbour, have the potential for underground mining.
Donkin coal mine reserves
Coal at the Donkin project is regarded as high-quality metallurgical coal (low-ash, high-energy thermal coal).
The coal mine was estimated to have probable mineable reserves of 58Mt. The indicated and inferred coal resources were estimated to be 481Mt.
Kameron completed the dewatering of two 3.6km-long access tunnels to the mine’s Harbour coal seam in the second quarter of 2015. Access to the Hub seam is provided by constructing two slopes between the Harbour and Hub seams.
Construction of a new warehouse was completed in the second quarter of 2016, while tunnel refurbishment works and additional underground assessment drilling were also completed during the same year.
Coal mining at Donkin
The room-and-pillar (board-and-pillar) mining method with partial pillar extraction using four continuous miners was applied to extract coal from Donkin.
The main development area of the Harbour seam is located along the strike of the seam and runs from east and west of the access tunnels. The secondary or production panels were driven downwards to a depth of 600m.
The CHPP comprised a raw coal stockpile reclaim system incorporating three coal feeders onto a reclaim conveyor located in a tunnel, a two-stage reduction crushing station, a plant feed system, and dry disposal reject handling system.
The 650tph processing plant features a single-stage, large diameter, dense medium cyclone to process coal, spirals to process the mid-size material, and flotation to beneficiate the fine coal.
Coal produced at Donkin was stockpiled on-site before transporting as well as stockpiled at the Provincial Energy Ventures (PEV) port in Sydney, Cape Breton. It was planned to be exported to the Atlantic basin market and Asia.
PEV recently drilled the seafloor around its dock to a depth of 16.5m to fit larger, capesize vessels, which reduced the cost of shipping Donkin’s coal to overseas markets, especially in Asia.
Infrastructure facilities at Donkin
Power supply for the mine is provided by a new 69kV electrical line from the town of Glace Bay to the newly constructed electrical sub-station at the project.
Access to the mine site is through a 1km-long all-weather gravel road that connects to the paved roads that extend to Sydney.
Other existing infrastructure includes a metal storage building currently being utilised as an office, storage, and maintenance facility.
The project also included the construction of a barge-loading facility to enable the transhipment of coal.
Royalty and milestone payments
Morien received a gross production royalty of 2% on the first 500,000t of coal sales per quarter and 4% on any coal sales above 500,000t throughout the project’s mine life, as per the definitive purchase and sale agreement signed with Kameron.
Kameron made one milestone payment of $2m to Morien in February 2015 and a second milestone payment of $2m in February 2017.
Morien also entitled to receive an additional $1.5m on the first commercial sale of export coal from Donkin and on the third anniversary of the transaction closure on 27 February 2018.