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Take a Look at Prairie and You Might See Greener Grass on the Other Side – Malcolm Stacey, ShareProphets

22nd February 2018 / Leave a comment

Hello Share Splurgers. The name Prairie Mining (PDZ) might give an impression that it’s a green company. Yet it deals in coal. But this coal is ideal for making coke, and from school days I think this is a cleaner alternative to the stuff we burned to keep the ‘frost flowers’ from the inside of our windows in the ‘fifties.

Since I bought into Prairie in December, the shares have risen from 30p to 39p. Which is up by about a third. Not bad. But I have grounds for believing that the jolly action isn’t over yet. Luckily, Prairie was one of my Shareprophets tips for 2018 and I continue to have great faith in this lot.

Coke is used to make steel. You’ll be aware that sales of steel, so depressed a few years ago, are making a comeback. It’s all this structural work being done by the emerging nations. As well as big projects in the developed world – including that big new rail plan here in Blighty. But that was known when I bought the share. What has given further impetus since then has been an RNS this month saying Prairie had been talking to a big polish miner called JSW. The idea was to co-operate, though this has yet to be confirmed.

According to rumours, JSW might even buy Prairie’s coke mine in Debiensko – it’s valued at £350 million, but there’s no firm word from Prairie on this story. And also China Coal is also interested in Prairie. Enough, it seems to order a bankable feasibility study – once again China helps to boost a share price.

I’ve not heard that either of Prairie’s two big mines are yet producing the black lumps in commercial quantities, but they will be doing that soon and, ok, investing in miners isn’t always hugely successful for private shareholders like us, but this one does seem to harbour the possibility of becoming a bagger of some kind (if all goes to plan).

And now to the coal fire in the Punter’s Return.

Link here to view the article on the ShareProphets website

Prairie Mining #PDZ – Drilling Results Affirm Jan Karski as Semi-Soft Coking Coal

21st February 2018 / Leave a comment

PRAIRIE MINING #PDZ – DRILL RESULTS AFFIRM JAN KARSKI’S STATUS AS A GLOBALLY SIGNIFICANT SEMI-SOFT (TYPE 34) COKING COAL PROJECT 

HIGHLIGHTS

  • Prairie’s use of modern exploration techniques continues to transform the Jan Karski Mine with latest drill results re-affirming the capability of the Project to produce high value ultra-low ash semi-soft coking coal, known as Type 34 coal in Poland
  • Outstanding results from coke oven testing demonstrate superior coal quality specification compared to typical parameters of internationally traded semi-soft coking coals and domestic Type 34 coals, including an exceptionally high Coke Strength after Reaction which is a parameter highly prized by steelmakers
  • Historically Poland’s Lublin Coal Basin has been associated with thermal coal production, however Prairie’s exploration program conducted according to international standards has demonstrated beyond doubt that the 391 coal seam at Jan Karski hosts a globally significant deposit of semi-soft / Type 34 coking coal
  • Washplant flow sheet design conducted as part of the China Coal technical studies anticipates mine production will be up to 75% ultra-low ash semi-soft / Type 34 coking coal, with outstanding overall saleable coal yield of 82%
  • Czech and Polish supply of semi-soft / Type 34 coking coal to the European steel industry has dramatically decreased over the last two years due to mine closures and declining production, with regional coke and steelmakers forced to replace the supply deficit with imports
  • Benchmarking analysis of Jan Karski’s ultra-low ash product against semi-soft coking coal produced in the Czech Republic and from recently closed Polish mines demonstrates the potential of the Jan Karski Type 34 coal to replace these coals in the regional market
  • The Company can now advance discussions with regional steelmakers and coke producers for future coking coal sales and offtake on the basis of selling ultra-low ash semi-soft / Type 34 coking coals from Jan Karski
  • Drill results will be incorporated in China Coal’s technical studies for the Jan Karski Mine

 

Prairie Mining Limited is pleased to announce the results of enhanced coal quality analysis and test work from a recently completed borehole (Kulik 1) at its 100% owned Jan Karski Mine. The coking coal quality results are superior to the drill results announced in May 2017, and further confirm that Jan Karski is a globally significant semi-soft coking coal (“SSCC”) / Type 34 coking coal deposit with the potential to produce a high value ultra-low ash SSCC with an exceptional CSR and a high 75% coking coal product split.

Comparison of the latest coking coal quality results to other mines in Poland and the Czech Republic that have historically produced SSCC or Type 34 coking coal show the great potential Jan Karski has to meet European market demand for Type 34 semi-soft coking coal as production from other Czech and Polish mines continues to diminish over the coming years.

Table 1: SSCC / Type 34 Coking Coal Quality – Jan Karski (Kulik 1) compared to other Czech and Polish Type 34 coals

Parameter

Jan Karski (Kulik 1)

Typical SSCC Coal (Upper Silesia – Poland)

Darkov

(Czech Republic)

Karvina CSA

(Czech Republic)

Rank (Ro)

0.85

0.82

1.15

1.00

VM %

35-37

38

27

28

Ash %

3.5

8.4

8.0

8.0

FSI

7.0

6.5

4.5

5

Roga Index

82

70

–

–

Vitrinite %

84

–

43

42

Dilatation

64

59

25

25

Fluidity

268

380

300

500

CSR

54

–

45-48

45-50

Type

34.2

34.2

–

–

These latest results will be incorporated into the non-JORC technical studies currently underway by Prairie’s strategic partner, China Coal.

Prairie’s CEO Ben Stoikovich commented: “Prairie’s modern exploration program has demonstrated that Jan Karski is a globally significant semi-soft / Type 34 coking coal project, whereas historically the Lublin Coal Basin has been associated with thermal coal production only. This presents an outstanding economic development opportunity for the Lublin region, and Chelm province in particular, to become a leading European supplier of coking coal to the steel industry. Our latest studies anticipate that up to 75% of saleable production will be semi-soft / Type 34 coking coal, which is a high value product with the current benchmark FOB Australia price at ~USD135/t. With such a high proportion of saleable product from Jan Karski anticipated to be high value semi-soft / Type 34 coking coal, project economics are likely to be significantly enhanced compared to the 2016 Pre-Feasibility Study results. Coal tested from the Kulik 1 borehole demonstrated exceptional coking parameters, including CSR of 54, swelling index of 7.0 and fluidity of 268. With the ongoing closure of coal mines in the Czech Republic and Poland that produce semi-soft / Type 34 coking coal, there is a growing regional market opportunity for Jan Karski ultra-low ash semi-soft / Type 34 coking coals. Independent analysis has indicated that due to the superior coal quality of Jan Karski semi-soft / Type 34 coking coal, we have the potential to achieve market pricing of some 10% above the standard international SSCC benchmarks.“

For further information, please contact:

Prairie Mining Limited

Tel: +44 207 478 3900

Ben Stoikovich, Chief Executive Officer

Email: info@pdz.com.au

Sapan Ghai, Head of Corporate Development

RESULTS FROM RECENT DRILLING AND EXPANDED COAL QUALITY ANALYSIS

Prairie has now completed drilling the Kulik 1 borehole at Jan Karski which was a large diameter borehole enabling sufficient quantities of coal from the 391 seam to be collected to meet the requirements for physical coke testing, specifically confirmation of Coke Strength after Reaction (“CSR”) and extended coal washability test work. Coke testing was conducted at Centralne Laboratorium Pomiarowo-Badawcze Sp. z o.o. (“CLPB”)laboratories in Poland which is controlled by Jastrzębska Spółka Węglowa (“JSW”) and is internationally accredited as a commercial coal and coke testing laboratory. Washability and other basic coal quality analyses were conducted in the UK. CSR analysis is considered vital in testing for a coal’s coking properties and is important to steelmakers as it is an indicator of the performance / strength of the coke produced from the coal. The full range of standard coking tests were also conducted as shown in Table 2 below:

Table 2: Analysis results from Jan Karski Kulik 1 borehole – 391 seam

COKING PROPERTIES

FSI

7.0

Roga Index

82

CSR

%

54.0

CRI

%

36.5

Ash in Coke

%

5.8

Sulphur in Coke

%

0.78

Giesler Plastometer

Initial Softening

°C

404

Max Fluidity temp

°C

440

Resolidification

°C

463

Max Fluidity

ddpm

268

ASTM Dilation

Softening Temperature

°C

380

Max Contraction Temp

°C

420

Max Dilation Temp

°C

450

Max Dilation

% D

64

PROXIMATE ANALYSIS

Inherent moisture

adb%

1.73

Ash

adb%

3.45

Volatile Matter

adb%

35.5

OTHER COAL PROPERTIES

Sulphur

ar%

1.00

Rank (Ro)

0.85

Vitrinite

%

84

 

JAN KARSKI COKING COAL KEY QUALITY ADVANTAGES

Ultra-low Ash

Washability analysis from the Kulik 1 borehole and previous boreholes drilled by Prairie across Jan Karski has demonstrated that due to the low inherent ash and excellent washability characteristics of the 391 seam, Jan Karski SSCC is unique with ash product levels of 3.45% or less (air dried) and far superior to typical ash levels for major coking coal brands (both hard and soft) traded internationally and produced domestically in Europe. Figure 1 (refer to www.pdz.com.au for figure 1) shows there is a range of ash specifications for semi-soft coking coals. Coal from the Kulik 1 borehole had ash of 3.45% at a float RD of 1.4, again demonstrating that Jan Karski SSCC is an ultra-low ash product compared to other SSCCs. Low ash provides a number of technical benefits including improved coke strength and caking properties, and reduced fuel rate in the blast furnace.

The ultra-low ash content increases the coal’s value-in-use to steel and coke makers, making the product highly saleable in both the domestic European and international markets. One of the key outcomes of utilising ultra-low ash coking coal to produce low ash coke ash is the resulting decreased fuel rate. This has a key environmental benefit for steel makers as it reduces CO2 emissions per tonne of hot metal produced.

Prairie’s analysis predicts increasing global demand for ultra-low ash coking coal for blending with hard coking coal (“HCC”), due to a continuing trend of rising average ash levels in globally traded hard coking coals. Premium HCC resources with low ash are becoming increasingly scarce, forcing consumers to make concessions on HCC ash levels. Ultra-low ash coking coals for blending are becoming increasingly sought after by consumers seeking to “blend-down” the ash levels in their coke blends. This is a particular advantage for European steelmakers where EU regulations focus on reduced CO2 emissions and compliance with other EU emissions directives. The trend of ever more stringent emissions standards for steelmakers imposed by the EU indicates a positive future for marketability of Jan Karski ultra-low ash semi-soft / Type 34 coking coal.

Exceptionally High CSR

The measured CSR (54) of the 391 seam from Kulik 1 borehole at Jan Karski is at the very top end of the range for globally traded SSCC. A CSR figure of 54 shows the coal has the ability to form a coherent coke mass, a sought after quality by steelmakers.

Other Positive Attributes

Other Jan Karski ultra-low ash SSCC quality positives are its high vitrinite content, high-range FSI (7.0), and fluidity of 268. The volatile matter is in the range typical for Australian traded SSCCs.

COMPARISON TO SEMI-SOFT COKING COALS PRODUCED IN THE CZECH REPUBLIC AND POLAND

SSCC is produced in the Czech Republic by mining company OKD, formerly New World Resources. Two SSCC brands are produced by OKD, Karvina CSA and Darkov. According to Prairie’s estimates, OKD currently produces approximately 1.8Mtpa of semi-soft / Type 34 coking coal. Indications are that these mines will cease production by 2022. Furthermore, during 2017 mine closures and production changes in Poland that have resulted in a reduction of availability of semi-soft / Type 34 coking coal in the domestic market of almost 2Mtpa.

Jan Karski ultra-low ash semi-soft / Type 34 coking coal quality parameters compare favourably with the coals currently and historically produced in the Czech Republic and Poland, with a summary comparison of coal qualities indicated in Table 3. These types of coals find wide acceptance in European coke ovens and particularly in stamp charging coke batteries which are widely used in Poland and across Central Europe.

Table 3: SSCC / Type 34 Coking Coal Quality – Jan Karski (Kulik 1) compared to other Czech and Polish mines

Parameter

Jan Karski (Kulik 1)

Typical SSCC Coal (Upper Silesia – Poland)

Darkov

(Czech Republic)

Karvina CSA

(Czech Republic)

Rank (Ro)

0.85

0.82

1.15

1.00

VM %

35-37

38

27

28

Ash %

3.45

8.4

8.0

8.0

FSI

7.0

6.5

4.5

5

Roga Index

82

70

–

–

Vitrinite %

84

–

43

42

Dilatation

64

59

25

25

Fluidity

268

380

300

500

CSR

54

–

45-48

45-50

Type

34.2

34.2

–

–

Increasing Polish Dependence on Hard Coal Imports

According to prominent Polish financial newspaper Parkiet Gazeta Gieldy, 2017 data from the EU’s statistical office Eurostat suggests Poland produced 65.8 million tonnes of hard coal in 2017, approximately 6 million tonnes less than in 2016. The decrease is attributed to the continued closure and restructuring of Polish coal mines. Conversely, Polish demand for hard coal remained strong during 2017, with Poland being forced to import 13.3 million tonnes of hard coal to meet its own needs – an increase of 60% in hard coal imports year on year. This follows a steady trend in Poland over the last few years with domestic production of hard coal declining and increased reliance on imports.

Increased European Demand for Type 34 Coal

Declining production of Czech and Polish semi-soft / Type 34 coking coal has resulted in steel makers becoming more aware of the importance of security of supply of the raw material. Over the last 12 months, lack of delivery of semi-soft / Type 34 coking coal has forced some Central European steel makers to introduce urgent measures including changes in the coking charge mix and increased imports, thus generating additional costs and disturbing normal production.

According to an article by Dziennik Gazeta Prawna, in February 2018 Lakshmi Mittal (Chairman and CEO of ArcelorMittal S.A. (“ArcelorMittal”)) met with Polish Prime Minister Mateusz Morawiecki during the World Economic Forum in Davos and informed the Prime Minister of the company’s concerns regarding the low availability of regionally produced semi-soft / Type 34 coking coal.  ArcelorMittal is reportedly considering further investment into steelmaking capacity in Poland following on from the completion of important modernisation investment projects at its Krakow unit in May 2017 totalling PLN 500 million including relining of the blast furnace for a new plant life of 20 years. However, security of supply of semi-soft / Type 34 coking coal remains an important consideration.

International and Polish Steel Sector Update

Global steel markets continued to strengthen in 2017 with groups such as Europe’s ArcelorMittal, Nucor Corporation of the US and South Korea’s POSCO all recently reporting higher profits. The recent rebound in the steel prices and increased demand have provided an ideal situation for steel makers. At the same time, North American and European steel makers have benefited from trade actions against dumping from China, which is responsible for half of global output, and continue to close underutilised and old-technology steel mills.

In December 2017, the President of the Board of Polish Steel Association estimated 2017 Polish steel product consumption to be approximately 13.5 million tonnes, up from 13.1 million tonnes in 2016 and forecast consumption rates to grow by over 11% over the next three years to reach 15 million tonnes. The increase was attributed to developments in the automobiles industry and household appliances sector, noting that Poland is Europe’s largest producer of such household appliances.

In 2016, Poland also imported 7.2 million tonnes of steel – an increase of 12% year on year and mainly from Ukraine, Russia and China – and exported 5.2 million tonnes of steel – a 6% increase year on year especially driven by exports to countries outside of the EU which increased by 16% from 2015 to 2016. This high level of demand for Polish steel from countries outside of the EU and particularly Ukraine, Russia and Turkey resulted in a negative trade balance of 4.5 million tonnes as Poland was unable to meet the demand.

PRICE BENCHMARKING

In 2017 independent coal market specialists CRL Energy Ltd (“CRL”) were appointed by Prairie to analyse the potential value of Jan Karski ultra-low ash SSCC in the market based on the results of the Cycow 9 borehole. CRL took two approaches to price benchmarking. The first approach applied the method used by the S&P Global Platts (“Platts”) publication of international benchmark coal prices. The second was a proprietary approach adopted by CRL based on value in use assessment incorporating assumptions regarding a typical Western European coking coal blend used by steel makers and proportions of Jan Karski ultra-low ash SSCC included in the blend.

The Platts coal market publication shows a number of penalty/premium factors that can be used to calculate relative values of coking coals against a stated benchmark. The limit of this method is that it assumes all markets would derive the same value from a particular coal; this is not strictly applicable in all cases, since value is also a function of the other coals in the blend, coke versus PCI rate and plant configuration. The “benchmark” coal used in this evaluation is the Rio Tinto Hunter Valley semi-soft, hence this coal is calibrated at 100% of the benchmark. The Platts benchmarking shows the Jan Karski coal specification is valued at 112.7% of the Rio Tinto semi-soft specification. The only comparable coal is the Blackwater coking coal (which is more of a semi-hard type specification) and the NZ SSCC (a low ash SSCC product).

Both Platts benchmarking and value in use modelling show Jan Karski is a high value SSCC, driven substantially by the ultra-low ash. The Platts specification benchmarking suggests Jan Karski should be priced at a 10% premium above the benchmark Rio Tinto Hunter Valley SSCC. 

COAL PROCESSING UPDATE AND COKING COAL YIELD

Dargo Associates, specialist coal handling and preparation consultants were appointed to re-evaluate the potential yields of ultra-low ash coking coal from Jan Karski and to develop a washplant flow sheet as part of the Chinese technical studies currently underway. To evaluate the yield of ultra-low ash coal, the washability tests were extended to give more information on separation in the lower density ranges.  Separating at low density increases the quantities of near density material and the extended washability test work was used to identify the most efficient wash plant process. The washability results from the recently drilled Kulik 1 borehole were consistent with the results from washability analysis conducted for all of the nine boreholes Prairie has drilled across Jan Karski, demonstrating exceptionally high yields of ultra-low ash (<3.5%) product coal at RD1.40 float.

Preliminary analysis has shown that the production of ultra-low ash SSCC (2.5 – 3.5%) results in an overall yield of saleable coal of 82%, which is similar overall yield as indicated in the original Jan Karski Pre-Feasibility Study (“PFS”) published in March 2016. Overall mine yields are hardly impacted by the ultra-low ash beneficiation as any coal lost due to the lowering of ash on the ultra-low ash SSCC product reports to the thermal product.

The predicted ratio of ultra-low ash SSCC to thermal coal is 75% coking coal to 25% thermal coal. The thermal coal product is anticipated to have 13% ash and will be in line with typical API2 specification export quality thermal coal. Should Prairie decide to sell a typically higher ash Polish domestic thermal coal of up to 25% ash, the overall yield will increase further.

BACKGROUND ON JAN KARSKI

In March 2016, Prairie announced the results of a PFS for Jan Karski confirming the technical viability and robust economics of the Project and highlighting its potential to become one of the lowest cost, large scale strategic coal suppliers to be developed in Europe.

The Study utilised an updated Coal Resource Estimate (“CRE”) for the Project which comprises a Global CRE of 728Mt including an Indicated Resource of 181Mt from two coal seams, the 391 and 389 seams. The PFS incorporated a mine plan based on an initial Marketable Ore Reserve Estimate generated from the indicated resources within the 391 and 389 seams.

Table 4: Jan Karski Mine Resource JORC Coal Resource and Reserve Estimate – 389 & 391 Seams

Coal Seam

Indicated Coal Resource

In-Situ (Mt)

389

17

391

164

Total

181

Probable Recoverable Coal Reserves (Mt)

170

Probable Marketable Coal Product (Mt)

139

To view all illustrations and figures, please refer to this announcement on the Company’s website at www.pdz.com.au 

Forward Looking Statements

This release may include forward-looking statements. These forward-looking statements are based on Prairie’s expectations and beliefs concerning future events. Forward looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of Prairie, which could cause actual results to differ materially from such statements. Prairie makes no undertaking to subsequently update or revise the forward-looking statements made in this release, to reflect the circumstances or events after the date of that release.

Competent Person Statements

The information in this announcement that relates to Exploration Results is based on, and fairly represents information compiled or reviewed by Mr Jonathan O’Dell, a Competent Person who is a Member of The Australasian Institute of Mining and Metallurgy. Mr O’Dell is a part time consultant of the Company. Mr O’Dell has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’. Mr O’Dell consents to the inclusion in the report of the matters based on his information in the form and context in which it appears.

The information in this announcement that relates to the Coal Resources and Coal Reserves was extracted from Prairie’s announcement dated 8 March 2016 entitled “Pre-feasibility Study Confirms LCP As One of The Lowest Cost Global Coal Suppliers Into Europe” which is available to view on the Company’s website at www.pdz.com.au.

The information in the original announcement that relates to Coal Resources is based on, and fairly represents, information compiled or reviewed by, Mr Samuel Moorhouse, a Competent Person who is a Chartered Geologist and is employed by independent consultants Royal HaskoningDHV UK Limited. Mr Moorhouse has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’.

The information in the original announcement that relates to Coal Reserves is based on, and fairly represents, information compiled or reviewed by Mr Maarten Velzeboer, a Competent Person, Member of the Institute of Materials, Minerals and Mining (MIMMM). Mr Velzeboer has worked in deep coal mines in New South Wales and Queensland in Australia and the Karaganda Coalfield in Kazakhstan. Mr Velzeboer has been engaged in a senior capacity in the design and development of proposed mines in Queensland, Australia, Botswana and Venezuela. Mr Velzeboer is employed by independent consultants Royal HaskoningDHV. Mr Velzeboer has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’.

Prairie confirms that: a) it is not aware of any new information or data that materially affects the information included in the original announcements; b) all material assumptions and technical parameters underpinning the Coal Resource and Coal Reserve included in the original announcements continue to apply and have not materially changed; and c) the form and context in which the relevant Competent Persons’ findings are presented in this presentation have not been materially modified from the original announcements.

 

JORC Code, 2012 Edition – Table 1

SECTION 1 SAMPLING TECHNIQUES AND DATA

(Criteria in this section apply to all succeeding sections.)

Criteria

JORC Code explanation

Commentary

Sampling techniques

·     Nature and quality of sampling (eg cut channels, random chips, or specific specialised industry standard measurement tools appropriate to the minerals under investigation, such as down hole gamma sondes, or handheld XRF instruments, etc). These examples should not be taken as limiting the broad meaning of sampling.

·     Include reference to measures taken to ensure sample representivity and the appropriate calibration of any measurement tools or systems used.

·     Aspects of the determination of mineralisation that are Material to the Public Report.

 

·     Coal cores were taken from continuous cores in the Carboniferous sections of the boreholes.

·     Assessment of coal quality and type is based on the results of laboratory tests of the coal samples taken from the borehole cores.

·     All seams equal to or thicker than 0.60 m were analysed.

·     Dirt (rock) partings in-seam less than 0.05 m were included in the coal sample and analysed with the coal.

·     Dirt partings equal to, or thicker than 0.05 m were analysed separately.

·     Average core yield was 100%. Core yield for the target seam 391 was 100%, confirmed by core measurement and geophysics.

Drilling techniques

·     Drill type (eg core, reverse circulation, open-hole hammer, rotary air blast, auger, Bangka, sonic, etc) and details (eg core diameter, triple or standard tube, depth of diamond tails, face-sampling bit or other type, whether core is oriented and if so, by what method, etc).

·     The borehole was drilled open hole to 16 m below the base of the Jurassic, approximately 707 m, and cased. Continuous coring was used in the in the coal measure strata below. Core diameter was 85 mm (PQ).

Drill sample recovery

·     Method of recording and assessing core and chip sample recoveries and results assessed.

·     Measures taken to maximise sample recovery and ensure representative nature of the samples.

·     Whether a relationship exists between sample recovery and grade and whether sample bias may have occurred due to preferential loss/gain of fine/coarse material.

·     During the drilling of the borehole, coal samples were collected from the drill core using methods that were standard for the coal industry in Poland (according to GWP and international standard ISO 14180:1998(E) – Solid mineral fuels – Guidance on the sampling of coal seams)

·     Core recovery was determined for the coal samples by measuring the lengths of recovered core and weighing broken/fragmentary core and calculating length to provide an overall recovery length and percentage as compared to the drilling depths. Final checks are provided by comparison with thicknesses determined from the suite of geophysical logs.

·     Core recoveries were recorded for each core run and for individual seams.

·     There is no known relationship between recovery and quality. 

·     All cores were photographed.

Logging

·     Whether core and chip samples have been geologically and geotechnically logged to a level of detail to support appropriate Mineral Resource estimation, mining studies and metallurgical studies.

·     Whether logging is qualitative or quantitative in nature. Core (or costean, channel, etc) photography.

·     The total length and percentage of the relevant intersections logged.

·     The cores have been logged and analysed in sufficient detail to support this announcement. Cores were analysed by Centralne Laboratorium Pomiarowo- – Badawcze Sp. z o.o. laboratories certified to Polish national standards and at Infrastructure and Energy, Socotec House Bretby who are certified to international standards. The results are considered fit for purpose.

·     Detailed borehole records are presented in the “Borehole Documentation” which contains the written description, graphic log (borehole card) and details of analyses and interpretations, including the final accepted seam thicknesses.

·     The Carboniferous section was fully cored and logged throughout.

Sub-sampling techniques and sample preparation

·     If core, whether cut or sawn and whether quarter, half or all core taken.

·     If non-core, whether riffled, tube sampled, rotary split, etc and whether sampled wet or dry.

·     For all sample types, the nature, quality and appropriateness of the sample preparation technique.

·     Quality control procedures adopted for all sub-sampling stages to maximise representivity of samples.

·     Measures taken to ensure that the sampling is representative of the in situ material collected, including for instance results for field duplicate/second-half sampling.

·     Whether sample sizes are appropriate to the grain size of the material being sampled.

·     Cores were not split but sampled as whole core as is standard practice with coal core. Detailed core recovery measurements were made allowing assessment of the representative nature of the core analysed. Cores were wrapped in plastic to prevent moisture loss prior to analysis. The target seam was sampled as soon as practicable, double packed in plastic bags which were purged with nitrogen gas and kept refrigerated during transport and prior to analysis. (In accordance with Australian best practice for the sampling of coking coals)

Quality of assay data and laboratory tests

·     The nature, quality and appropriateness of the assaying and laboratory procedures used and whether the technique is considered partial or total.

·     For geophysical tools, spectrometers, handheld XRF instruments, etc, the parameters used in determining the analysis including instrument make and model, reading times, calibrations factors applied and their derivation, etc.

·     Nature of quality control procedures adopted (eg standards, blanks, duplicates, external laboratory checks) and whether acceptable levels of accuracy (ie lack of bias) and precision have been established.

·     Laboratory procedures were to the standard industry practices.

·     Geophysical logs used in the boreholes include natural gamma, density (gamma gamma), acoustic scanner, dual laterolog and caliper logs.  These are of sufficient quality to be used for quantitative (i.e. seam thickness) determinations.

·     The laboratories used are accredited to national and international standards and have adequate quality control practices including analysis of standards and participation in “round robin” exercises.

Verification of sampling and assaying

·     The verification of significant intersections by either independent or alternative company personnel.

·     The use of twinned holes.

·     Documentation of primary data, data entry procedures, data verification, data storage (physical and electronic) protocols.

·     Discuss any adjustment to assay data.

·      Geological supervision over all drilling works was performed by geological staff contracted to PDCo, the Company’s 100% owned Polish subsidiary, who are qualified and licensed according to Polish Geological and Mining Law

·     These geological staff also performed detailed core logging.

·     Twinned boreholes were not used.

·     Primary data is held as hard copy (laboratory certificates etc.) and this has been transferred to electronic spreadsheets.

·     No adjustments have been made to assay data.

Location of data points

·     Accuracy and quality of surveys used to locate drill holes (collar and down-hole surveys), trenches, mine workings and other locations used in Mineral Resource estimation.

·     Specification of the grid system used.

·     Quality and adequacy of topographic control.

·     The borehole location has been accurately determined and surveyed in the Poland CS2000, zone 8 grid system.

·     Detailed topographic maps are available.

Data spacing and distribution

·     Data spacing for reporting of Exploration Results.

·     Whether the data spacing and distribution is sufficient to establish the degree of geological and grade continuity appropriate for the Mineral Resource and Ore Reserve estimation procedure(s) and classifications applied.

·     Whether sample compositing has been applied.

·     This announcement of exploration results relates to a single borehole, Kulik 1.

·     Sample compositing has not been used.

Orientation of data in relation to geological structure

·     Whether the orientation of sampling achieves unbiased sampling of possible structures and the extent to which this is known, considering the deposit type.

·     If the relationship between the drilling orientation and the orientation of key mineralised structures is considered to have introduced a sampling bias, this should be assessed and reported if material.

·     The borehole was nominally vertical and the coal seams have low to moderate dip and relatively simple structure and so there is no structural or orientation bias to the sampling.

·     The borehole has been surveyed for verticality with maximum deviation of approximately 29 m at a depth of 1037.50 m.

Sample security

·     The measures taken to ensure sample security.

·     All core samples were handled by staff contracted to PDCo under supervision of a licenced geologist. Core samples were marked for way up orientation placed in plastic in fully labelled wooden core boxes. These staff also undertook core sampling and in the case of the target seams this was supervised by consultants contracted to Prairie Mining.

Audits or reviews

·     The results of any audits or reviews of sampling techniques and data.

·     The data and techniques have been reviewed by the Competent Person and are considered adequate and appropriate.

SECTION 2 REPORTING OF EXPLORATION RESULTS

(Criteria listed in the preceding section also apply to this section.)

Criteria

JORC Code explanation

Commentary

Mineral tenement and land tenure status

·     Type, reference name/number, location and ownership including agreements or material issues with third parties such as joint ventures, partnerships, overriding royalties, native title interests, historical sites, wilderness or national park and environmental settings.

·     The security of the tenure held at the time of reporting along with any known impediments to obtaining a licence to operate in the area.

·     Prairie has held the exploration licences to five exploration concession areas that constitute the Jan Karski Mine: Cycow (K-6-7), Syczyn (K-8), Kulik (K-4-5), Kopina (K-9) and Sawin-Zachód.

·     On 1 July 2015, Prairie announced that it had secured the Exclusive Right to apply for, and consequently be granted, a mining concession for the Jan Karski Mine.

·     As a result of its geological documentation for the Jan Karski Mine deposit being approved, Prairie is now the only entity that can lodge a mining concession application over the Jan Karski Mine within a three (3) year period up and until April 2018. In addition, Prairie has the right to apply for and be granted a mining usufruct agreement for an additional 12 month period that precludes any other parties being granted a licence over all or part of the Jan Karski concessions. Prairie applied for a mining usufruct agreement in December 2017.

·     The approved geological documentation covers an area comprising all four of the original exploration concessions granted to Prairie (K-4-5, K-6-7, K-8 and K-9) and includes the full extent of the targeted resources within the mine plan for the Jan Karski Mine. In this regard, no beneficial title interest has been surrendered by the Company when the K-6-7 exploration concession expired last year. The Company intends to submit a mining concession application, over the mine plan area at Jan Karski (which includes K-6-7) prior to April 2018. Under Polish mining law, and owing to the Exclusive Right the Company has secured, Prairie is currently the only entity that may apply for and be granted a mining concession with respect to the K-6-7 area (the Exclusive Right also applies to the K-4-5, K-8 and K-9 areas of Jan Karski). There is no requirement for the Company to hold an exploration concession in order exercise the Exclusive Right and apply for a mining concession.

·     Prairie’s approved geological documentation did not include the Sawin-Zachód concession.

Exploration done by other parties

·     Acknowledgment and appraisal of exploration by other parties.

·     Not applicable.

Geology

·     Deposit type, geological setting and style of mineralisation.

·     The deposit is a Carboniferous hard coal consisting of coal seams separated by units of mudstone and sandstone.

Drill hole Information

·     A summary of all information material to the understanding of the exploration results including a tabulation of the following information for all Material drill holes:

o  easting and northing of the drill hole collar

o  elevation or RL (Reduced Level – elevation above sea level in metres) of the drill hole collar

o  dip and azimuth of the hole

o  down hole length and interception depth

o  hole length.

·     If the exclusion of this information is justified on the basis that the information is not Material and this exclusion does not detract from the understanding of the report, the Competent Person should clearly explain why this is the case.

·     X: 5678988 Y: 8444070 (Polish CS2000 zone 8)

·     H: 187.8 m a.s.l

·     Nominally vertical, deviation approximately 29 m at 113o at base of hole.

·     Hole length/depth – 1,037.50 m (drilling)

Data aggregation methods

·     In reporting Exploration Results, weighting averaging techniques, maximum and/or minimum grade truncations (eg cutting of high grades) and cut-off grades are usually Material and should be stated.

·     Where aggregate intercepts incorporate short lengths of high grade results and longer lengths of low grade results, the procedure used for such aggregation should be stated and some typical examples of such aggregations should be shown in detail.

·     The assumptions used for any reporting of metal equivalent values should be clearly stated.

·     Coal seams have normally been sampled as one continuous sample. Dirt partings of 5 cm in thickness or less have been sampled with the coal.

Relationship between mineralisation widths and intercept lengths

·     These relationships are particularly important in the reporting of Exploration Results.

·     If the geometry of the mineralisation with respect to the drill hole angle is known, its nature should be reported.

·     If it is not known and only the down hole lengths are reported, there should be a clear statement to this effect (eg ‘down hole length, true width not known’).

·     The boreholes are nominally vertical and the coal seams form part of a stratiform deposit dipping at approximately 0 – 5 degrees.

·     Intercept lengths used in the model are drill intercept lengths which will be modelled in 3D removing the need to calculate the true thickness. Because of the very low dip the difference between intercept thickness and true thickness is not significant.

Diagrams

·     Appropriate maps and sections (with scales) and tabulations of intercepts should be included for any significant discovery being reported These should include, but not be limited to a plan view of drill hole collar locations and appropriate sectional views.

·     Not applicable

Balanced reporting

·     Where comprehensive reporting of all Exploration Results is not practicable, representative reporting of both low and high grades and/or widths should be practiced to avoid misleading reporting of Exploration Results.

·     Not applicable.

Other substantive exploration data

·     Other exploration data, if meaningful and material, should be reported including (but not limited to): geological observations; geophysical survey results; geochemical survey results; bulk samples – size and method of treatment; metallurgical test results; bulk density, groundwater, geotechnical and rock characteristics; potential deleterious or contaminating substances.

·     Not applicable.

Further work

·     The nature and scale of planned further work (eg tests for lateral extensions or depth extensions or large-scale step-out drilling).

·     Diagrams clearly highlighting the areas of possible extensions, including the main geological interpretations and future drilling areas, provided this information is not commercially sensitive.

·     Prairie Mining may drill further boreholes if deemed appropriate.

 

Prairie Mining #PDZ – Strong Community Support as Jan Karski Environmental Permitting Advances

30th November 2017 / Leave a comment

Prairie Mining Limited #PDZ is pleased to announce the formal submission of the Environmental and Social Impact Assessment (“ESIA”) and initiation of the public consultation process for its 100% owned high value ultra-low ash semi-soft coking coal (“SSCC”) Jan Karski Mine in the Lublin Province, south east Poland (“Jan Karski” or “Project”).

  • Environmental permitting for Jan Karski advances following successful submission of the Environmental and Social Impact Assessment to the Lublin Regional Environment Directorate for Environmental Consent
  • Community Consultation Program initiated in the Cyców municipality within Lublin Province, showing strong community support for development of Jan Karski
  • 74% of residents of Lublin Province support the building of a new mine in the region per the results of a recent independent poll
  • Overwhelming public support for the development of Jan Karski demonstrated across the region with residents agreeing a new mine would bring significant employment opportunities and economic development to the region
  • China Coal Technical and Economic Studies for Jan Karski near completion with Prairie hosting China Coal and the Jinan Mine Design Institute in Poland to finalise capital cost estimates with Polish sub-contractors
  • Jan Karski continues to be one of the most advanced new large scale coking coal projects in the Northern Hemisphere, advancing towards development alongside partners China Coal and CD Capital.

Prairie’s Chief Executive Officer Ben Stoikovich commented: “With the submission of the ESIA and initiation of the public consultation process, Prairie continues towards applying for a Mining Concession to commence construction of the Jan Karski Mine together with our strategic partner China Coal. We now look forward to submitting our Mining Concession application in the upcoming months.

A recent independent poll of residents demonstrates strong support from local communities for major investment and job creation in the Lublin region with construction of the Jan Karski Mine. It is extremely positive to see that 74% of the residents of Cyców support the construction of a new coal mine. Jan Karski is one of the most advanced coking coal projects of significant scale in the Northern Hemisphere and its development will provide substantial economic and social benefits for Eastern Poland. During November, we had the pleasure of hosting China Coal and the Jinan Mine Design Institute in Poland to finalise capital cost estimates for the Project and meet with Polish subcontractors. China Coal’s Technical and Economic Studies are now nearly complete and will underpin a Chinese bank debt financing package for the construction of Jan Karski.”

SUBMISSION OF ESIA & INITIATION OF PUBLIC CONSULTATION

An application for issuing the environmental decision together with the ESIA was submitted to the Regional Director for Environmental Protection (“RDOS”) in Lublin on 6 October 2017. Taking into account the RDOS’s additional comments the motion and ESIA were supplemented on 22 November 2017. The ESIA documentation meets all the formal requirements and is being reviewed by the RDOS.

Prairie is now waiting for approval of the ESIA in the form of Environmental Consent decision, which is the last component to meet all formal requirements to apply for the Mining Concession for construction of Jan Karski. Independent environmental consultants have confirmed Prairie has met all pre-requisite requirements and can expect an environmental permit in due course.

As part of the environmental permitting process, the first public consultation was held in the Cyców Municipality (“Cyców”) within Lublin Province (“Lublin”) on 18 November 2017. The public consultation was organised in accordance with international standards, specifically, International Finance Corporation (“IFC”) Standards. The meeting was attended by local residents of the Cyców, including the mayor of Cyców, Wiesław Pikula, and current employees of the neighbouring Bogdanka mine. A presentation on Jan Karski’s development plans was given by Mr Miroslaw Taras (Prairie’s Group Executive), Witold Wołoszyn (Prairie’s Environmental and Planning Manager) and specialists from the international environmental consulting group, Multiconsult Polska Sp. z o.o. which had prepared the ESIA. Key advantages for the local community related to employment opportunities and social benefits associated with the development, construction and operation of Jan Karski including:

  • creation of 2,000 direct employment positions and 10,000 indirect jobs for the region once operational;
  • increasing skills of the workforce and through the implementation of International Standard training programmes;
  • stimulating the development of education, health services and communications within the region; and
  • building a mine that creates new employment for generations to come and career paths for families to remain in the region.

Prairie remains on track to have its full application for a Mining Concession submitted for Jan Karski in the coming months. In Poland, a Mining Concession application comprises the approval of a Deposit Development Plan (“DDP”), a Spatial Development Plan (rezoning of land for mining use), and an ESIA in the form of an Environmental Consent decision. Jan Karski’s DDP and Spatial Development Plan have already been officially approved.

Granting of the Environmental Consent will fulfil all the regulatory prerequisites for the Company to submit a formal Mining Concession application.

INDEPENDENT POLL DEMONSTRATES STRONG COMMUNITY SUPPORT FOR MINE DEVELOPMENT

Centrum Badań Marketingowych INDICATOR Sp. z o.o. (“CBM Indicator”) – an independent polling company with over 25 years expertise in the Polish market – carried out extensive research on public support for mine development in Lublin. The poll indicated overwhelming support exists amongst residents and there is acute awareness of the importance of coal supply for the Polish economy. Results of the poll indicated 74% of those living in Lublin supported the construction of a new mine in the region.

Key results are summarised below:

Do you support the construction of a new mine in Lublin?

Yes – 74%

No – 26%

Do you believe domestic coal mining is essential to Poland’s economy?

Yes – 92%

No – 8%

Do you believe a new mine in Lublin will decrease unemployment?

Yes – 80%

No – 20% 

Do you believe a new mine in Lublin will result in new infrastructure?

Yes – 72%

No – 28%

According to CBM Indicator’s poll, support for construction of a new mine in the area is extremely high in Cyców, where 82% of residents are aware of the vital role of coal for the Polish industry and 74% agree to a mine being built in their commune or in a neighbouring commune. Cyców already enjoys a lower unemployment rate and significantly better local infrastructure when compared to other municipalities in Lublin thanks to direct benefits of having Bogdanka operating adjacent to Cyców and consequently, residents of Cyców are familiar with the economic and social benefits mining can bring. 

CHINA COAL STUDY FOR THE JAN KARSKI MINE NEARS COMPLETION

In November 2017, the Company hosted a delegation in Poland including China Coal No.5 Construction Company Ltd (“China Coal”) and the Chinese Government’s officially authorised coal mine design institute Jinan Mine Design Institute, during which capital cost estimates for the construction and operation of Jan Karski were finalised alongside domestic Polish specialists, subcontractors and partners who will provide relevant Polish content.

Following the Chinese delegations visit to Poland, China Coal is set to complete all Technical and Economic Studies (“Studies”) required and considered “bankable” by Chinese financing institutions. In accordance with the Strategic Co-operation Agreement between Prairie and China Coal, the Studies will form the basis for provision of debt financing for the construction and development of Jan Karski.

Upon completion of the Studies, Prairie and China Coal will advance Chinese bank credit approval to fund construction of the Project and enter into a complete Engineering, Procurement, and Construction (“EPC”) contract under which China Coal will construct the Jan Karski Mine.

For further information, please contact:

Prairie Mining Limited

Tel: +44 207 478 3900

Ben Stoikovich, Chief Executive Officer

Email: info@pdz.com.au

Sapan Ghai, Head of Corporate Development

To view all images and illustrations in this announcement, please refer to www.pdz.com.au.

Prairie Mining (PDZ) – September 2017 quarterly report; Jan Karski mine one of the most advanced coking coal projects in Northern Hemisphere

31st October 2017 / Leave a comment

September 2017 Quarterly Report

 

HIGHLIGHTS

Debiensko Mine (Premium Hard Coking Coal)

Geo-technical Drill Program Underway

  • In preparation for the upcoming next phase of project studies, a shallow geo-technical drill program was completed at Debiensko during the quarter.
  • Results will be used for detailed design and engineering of surface structures associated with the shafts, coal handling and preparation plant and other surface facilities during the upcoming feasibility study.

Mine Site Redevelopment Program Update

  • Focus during the quarter has been on planning the mine site’s redevelopment program, including:
    • preparation for an in-fill drill program to increase JORC Measured and Indicated resources to support future feasibility studies;
    • initial demolition works; and
    • pre-qualification of study contractors.

Offtake Discussions Advance

  • Prairie continued discussions with regional steel makers and coke producers for future coking coal sales and offtake.
  • Highly favourable market fundamentals remain prominent as Europe’s steel industry continues to consume 47 Mt of hard coking coal annually, 85% of which is imported.

 

Jan Karski Mine (Semi-Soft Coking Coal)

Transformational Coking Coal Quality Results

  • Coal quality results from latest drilling have transformed Jan Karski into a high-value ultra-low ash semi-soft coking coal project.
  • Updated marketing and coal sales strategies have begun in the quarter following Prairie’s latest successful drilling results with Jan Karski’s semi-soft coking coal product expected to attract a 10% premium to international benchmark prices. Marketing and coal sales are strategies to be used in preliminary offtake discussions between Prairie and steel makers.

China Coal Studies Near Completion

  • China Coal’s studies for the development of the Jan Karski Mine have significantly advanced and will incorporate the coal quality results from the latest drilling at Jan Karski. Studies are due to be finalised in the coming months.
  • Under the Strategic Co-operation Agreement between Prairie and China Coal, the studies will support China Coal’s EPC contract to construct the Jan Karski Mine and will underpin a Chinese bank financing package.

Jan Karski Most Advanced Coking Coal Project in Northern Hemisphere

  • Spatial development plan approved at Jan Karski meaning the rezoning of 56 hectares of agricultural land for industrial use is complete allowing for construction of a mine site, shafts and associated surface infrastructure.
  • Prairie remains on track to submit a Mining Concession application for Jan Karski in the coming months following submission of the Environmental and Social Impact Assessment during October 2017.

 

Robust Coking Coal Fundamentals

Strong Price Environment Continues

  • Coking coal price environment has remained strong throughout the quarter attributed to strong cash margins of Chinese steel mills, production cuts by some Chinese miners, and production disruptions in Australia.

Coking Coal Reconfirmed as a Critical Raw Material for Europe

  • In Europe, coking coal remains on the European Commission’s 2017 revised list of Critical Raw Materials as European steel makers – including the newly-formed ThyssenKrupp Tata Steel Joint Venture – look to supply a changing automobile industry and numerous infrastructure programs.
    • Increasing demand for ultra-low emission vehicles is expected to drive growth in steel supply to the European automobile industry – almost 0.5 tonnes of coking coal are required to produce the structural, electrical and plated steel for each electric car.
    • UK infrastructure projects including the High Speed 2 Rail Line and the construction of the Hinkley Point C Nuclear Power Station are expected to use over 3 million tonnes of steel – equivalent to 375 London Olympic Stadiums.
    • According to BHP Billiton, China’s Belt and Road Initiative to advance globalisation and trading – and which includes several European countries including Poland – could result in up to 150 million tonnes of incremental steel demand. 
  • Prairie’s two large-scale Tier One assets are ideally positioned to supply coking coal to meet Europe’s steel demand in the future.

 

Corporate

  • Prairie and CD Capital completed an additional investment of US$2.0 million (A$2.6 million) in the form of non-redeemable, non-interest-bearing convertible loan notes.
  • Prairie has cash reserves of A$17 million. With CD Capital’s right to invest a further A$55 million as a cornerstone investor, plus with the Strategic Co-operation Agreement Prairie has with China Coal for financing and construction of Jan Karski, Prairie is in a strong financial position to progress with its planned development activities at Debiensko and Jan Karski.

Ben Stoikovich, Chief Executive Officer commented “Following coal quality testing that demonstrated premium quality ultra-low ash semi-soft coking coal at Jan Karski, it is clear that we hold one of the most advanced coking coal projects of significant scale in the Northern Hemisphere. Alongside our partner China Coal, we are nearing completion of all requisite studies required to facilitate already advanced discussions with Chinese debt providers. Jan Karski’s development will provide substantial economic and social benefits for Eastern Poland and we look forward to submitting our Mining Concession application shortly. At Debiensko, we continue works in order to restart the mine at a time when long term coking coal supply has become increasingly important to the European steel industry.“

For further information, please contact:

Prairie Mining Limited

+44 20 7478 3900

Ben Stoikovich, Chief Executive Officer

info@pdz.com.au

Sapan Ghai, Head of Corporate Development

DEBIENSKO MINE

The Debiensko Mine is a fully permitted, hard coking coal project located in the Upper Silesian Coal Basin in the south west of the Republic of Poland. It is approximately 40 km from the city of Katowice and 40 km from the Czech Republic.

Debiensko is bordered by the Knurow-Szczyglowice Mine in the north west and the Budryk Mine in the north east, both owned and operated by Jastrzębska Spółka Węglowa SA(JSW), Europe’s leading producer of hard coking coal.

The Debiensko mine was originally opened in 1898 and was operated by various Polish mining companies until 2000 when mining operations were terminated due to a major government led restructuring of the coal sector caused by a downturn in global coal prices. In early 2006 New World Resources Plc (“NWR”) acquired Debiensko and commenced planning for Debiensko to comply with Polish mining standards, with the aim of accessing and mining hard coking coal seams. In 2008, the Minister of Environment of Poland (“MoE”) granted a 50-year mine license for Debiensko.

In October 2016, Prairie acquired Debiensko with a view that a revised development approach would potentially allow for the early mining of profitable premium hard coking coal seams, whilst minimising upfront capital costs. Prairie has proven expertise in defining commercially robust projects and applying international standards in Poland. The fact that Debiensko is a former operating mine and its proximity to two neighbouring coking coal producers in the same geological setting, reaffirms the significant potential to successfully bring Debiensko back into operation.

Premium Quality Hard Coking Coal

Preliminary analysis indicates that a range of premium hard coking coals that will be in high demand from European steelmakers can be produced from Debiensko. This analysis is based on historical data, neigbouring operational coking coal mines and the results of a suite of modern coking tests performed on selected seams from a fully cored borehole drilled by the previous owners in 2015/16. Two premium hard coking coal specifications have been delineated from select seams at Debiensko, namely Medium volatile matter hard coking coal (“Mid-vol HCC”) and Low volatile matter hard coking coal (“Low-vol HCC”). Future study phases will determine the precise Debiensko premium hard coking coal quality specification on a year by year basis depending on final adopted mine plan, mining schedule and extent of coal blending.

Both Debiensko’s Mid-vol and Low-vol HCC lie within the range of premium hard coking coals produced globally. Indications are that the Mid-vol HCC at Debiensko is present between 850 m to 1,000 m from surface and the Low-vol HCC is present 1,000 m to 1,300 m below surface i.e. at depths similar to adjacent operating mines owned by JSW – the largest coking coal producer in Europe.

Preparation for the Next Phase of Project Studies

Drilling of 28 shallow geo-technical holes completed during the quarter. Information from the drill holes will be used for engineering design of foundations for structures associated with the shafts, coal handling and preparation plant (“CHPP”) and other surface facilities. These holes are essential in order to assess the soil conditions, properly design structural foundations and thus provide more accurate pricing in the tenders as required for a feasibility study.

Pre-qualification of contractors for the major components of the next phase of Debiensko studies commenced during the quarter including:

  • Drilling contractors for the planned in-fill drilling program (to update measured and indicated resources);
  • CHPP;
  • Shafts and bulk coal winder;
  • Desalination plant; and
  • Surface facilities.

The tender process for construction of the desalination plant is now underway with final specifications near completion.

Demolition of old surface structures of the former Debiensko mine including the bathhouse, switchgear building and locomotive garage was completed during the quarter. Further structures including walkways and old administrative buildings have been earmarked for demolition during the following quarter.

JAN KARSKI MINE

Transformational Coking Coal Quality Results Establish Jan Karski as a High Value Ultra-Low Ash Semi-Soft Coking Coal Mine

Following the latest drilling results at the Jan Karski Mine, Prairie announced coal quality testwork which confirmed the mine to be a high-value ultra-low ash semi-soft coking coal project. An Independent assessment by specialist coking coal market consultants predicts that Jan Karski ultra-low ash SSCC would potentially realise a 10% premium to international benchmark prices.

Preliminary discussions between Prairie and select European steel makers have confirmed the suitability of ultra-low ash SSCC to be utilised in coke oven blends. Consequently, the Company is currently updating the marketing and sales strategy for the coal which will be produced at Jan Karski and will incorporate this strategy into the studies.

China Coal Progress and Financing Discussions

In November 2016, Prairie and China Coal, China’s second largest coal mining company and one of the world’s most advanced and prolific shaft sinking and underground coal mine construction companies signed a landmark Strategic Co-operation Agreement for the financing and construction of the Jan Karski Mine.

Under the terms of the agreement China Coal is set to complete all studies required by Chinese financing institutions earmarked to provide financing for the construction and development of Jan Karski. Drafts of the Studies were submitted to Prairie in the previous quarter following which the Company hosted two delegations in Poland from China including: leading underground mine construction company and partner of Prairie, China Coal No.5 Construction Company Ltd. (“CC5C”); Chinese Government’s officially authorised coal mine design institute Jinan Mine Design Institute (“Jinan”); and China’s first large scale foreign trade corporation specialising in international engineering contracting, China National Machinery Import & Export Corporation (“CMC”).

The Chinese delegations were welcomed by the government-appointed Governor of Lublin Province and elected regional government officials of the Lublin region. Prairie conducted various site visits and facilitated meetings with domestic Polish contractors and suppliers who could participate in the construction of Jan Karski.

Prairie and China Coal’s technical teams continue to work together to:

  • agree a final version of the Studies which will form the basis of Chinese bank credit approval for funding construction of Jan Karski;
  • enter into a complete Engineering, Procurement, and Construction (“EPC”) contract under which CC5C to construct Jan Karski; and
  • incorporate relevant Polish content into the design and construction phases which will include working with a range of Polish specialists, sub-contractors and business partners.

Spatial Planning (Rezoning) Approval

Following completion of community consultation and submission by Prairie of all applications required to change the local spatial development plan to affect the rezoning of land for mining use, the Gmina (Municipality) of Siedliszcze officially adopted a new spatial development plan that will allow for the construction of the Jan Karski mine site in the location of Kulik.

The Resolution of the Town Council of Siedliszcze on to adopt the zoning plan was passed during the quarter completing yet another significant milestone towards Prairie obtaining a Mining Concession for Jan Karski.

The spatial planning approval process was conducted in parallel with approval by Poland’s Ministry of Agriculture for the rezoning of 56 hectares of agricultural land to be designated for industrial (mining) purposes. These 56 hectares are in the Kulik area where the Jan Karski mine shafts and major surface facilities will be located, as per the approved Jan Karski Deposit Development Plan (“DDP”) and the ongoing China Coal Bankable Feasibility Study.

Spatial planning approval was granted following the achievement by Prairie of another significant permitting milestone following official approval by the Lublin Regional Mining Authority of the Jan Karski DDP in May 2017 (refer to ASX announcement dated 25 May 2017).

Prairie remains on track to have its full application for a Mining Concession submitted for Jan Karski in the coming months. In Poland, a Mining Concession application comprises the approval of a DDP, a spatial development plan (rezoning of land for mining use), and an Environmental Social Impact Assessment (“ESIA”) in the form of an Environmental Consent decision.

Jan Karski’s DDP and Spatial Development Plan have now been officially approved and the ESIA was submitted following the quarter end. Granting of the Environmental Consent will fulfil all the regulatory prerequisites for the Company to submit a formal Mining Concession application.

CORPORATE

Additional Investment by CD Capital

In August 2017 following shareholder approval, Prairie completed the second convertible note investment with its cornerstone investor CD Capital Natural Resources Fund III LP (“CD Capital”). In July 2017, final investment terms were agreed for Prairie to issue a non-redeemable, non-interest-bearing, unsecured convertible loan notes for an aggregate principal amount of US$2.0 million (A$2.6 million) to CD Capital.

Financial Position

Prairie has cash reserves of A$17 million. With CD Capital’s additional U$2 million (A$2.6 million) investment now completed and their right to invest a further A$55 million as a cornerstone investor, plus with the Strategic Co-operation Agreement Prairie has with China Coal for financing and construction of Jan Karski, Prairie is in a strong financial position to progress with its planned development activities at Debiensko and Jan Karski.

Forward Looking Statements

This release may include forward-looking statements. These forward-looking statements are based on Prairie’s expectations and beliefs concerning future events. Forward looking statements are necessarily subject to risks, uncertainties and other factors, many of which are outside the control of Prairie, which could cause actual results to differ materially from such statements. Prairie makes no undertaking to subsequently update or revise the forward-looking statements made in this release, to reflect the circumstances or events after the date of that release.

APPENDIX 1 – EXPLORATION TENEMENT INFORMATION

As at 30 September 2017, the Company has an interest in the following tenements:

Location

Tenement

Percentage Interest

Status

Tenement Type

Jan Karski, Poland

Jan Karski Mine Plan Area (K-4-5, K-6-7, K-8 and K-9)*

100

Granted

Exclusive Right to apply for a mining concession

Jan Karski, Poland

Kulik (K-4-5)

100

Granted

Exploration

Jan Karski, Poland

Syczyn (K-8)

100

Granted

Exploration

Jan Karski, Poland

Kopina (K-9)

100

Granted

Exploration

Jan Karski, Poland

Sawin-Zachód

100

Granted

Exploration

Debiensko, Poland

Debiensko 1**

100

Granted

Mining

Debiensko, Poland

100

Granted

Mining & Exploration (includes gas rights)

 *  On 1 July 2015, the Company announced that it had secured the Exclusive Right to apply for, and consequently be granted, a mining concession for Jan Karski. As a result of its geological documentation for Jan Karski deposit being approved, Prairie is now the only entity that can lodge a mining concession application over Jan Karski within a three (3) year period.

The approved geological documentation covers an area comprising of all four of the original exploration concessions granted to Prairie (K-4-5, K-6-7, K-8 and K-9) and includes the full extent of the targeted resources within the mine plan for Jan Karski. In this regard, no beneficial title interest has been surrendered by the Company when the K-6-7 exploration concession expired during the quarter. The Company intends to submit a mining concession application, over the mine plan area at Jan Karski (which includes K-6-7) within the next 12 months. Under Polish mining law, and owing to the Exclusive Right the Company has secured, Prairie is the only entity that may apply for and be granted a mining concession with respect to the K-6-7 area (the Exclusive Right also applies to the K-4-5, K-8 and K-9 areas of Jan Karski). There is no requirement for the Company to hold an exploration concession in order exercise the Exclusive Right and apply for a mining concession.

** Under the terms of the Debiensko Mining Concession issued in 2008 by the MoE (which is valid for 50 years from grant date), commencement of production is to occur by 1 January 2018. Not commencing production by 2018 will not infringe on the validity and expiry date (June 2048) of the Mining Concession, however in December 2016, the Company did make an application to the MoE to amend the Debiensko Mining Concession to alter the date for commencement of production from 2018 to 2025 with a decision still pending.

To view this announcement in full including all illustrations and figures please refer to www.pdz.com.

+Rule 5.5

Appendix 5B

Mining exploration entity and oil and gas exploration entity quarterly report

Introduced 01/07/96  Origin Appendix 8  Amended 01/07/97, 01/07/98, 30/09/01, 01/06/10, 17/12/10, 01/05/13, 01/09/16

Name of entity

PRAIRIE MINING LIMITED

ABN

Quarter ended (“current quarter”)

23 008 677 852

30 September 2017

Consolidated statement of cash flows

Current quarter $A’000

Year to date
(3 months)
$A’000

1.

Cash flows from operating activities

–

–

1.1

Receipts from customers

1.2

Payments for

(1,456)

(1,456)

(a)   exploration & evaluation

(b)   development

–

–

(c)   production

–

–

(d)   staff costs

(605)

(605)

(e)   administration and corporate costs

(240)

(240)

1.3

Dividends received (see note 3)

–

–

1.4

Interest received

119

119

1.5

Interest and other costs of finance paid

–

–

1.6

Income taxes paid

–

–

1.7

Research and development refunds

–

–

1.8

Other (provide details if material)

(a)  Business development costs

(b)  Property rental and gas sales

(317)

141

(317)

141

1.9

Net cash from / (used in) operating activities

(2,358)

(2,358)

2.

Cash flows from investing activities

(22)

(22)

2.1

Payments to acquire:

(a)   property, plant and equipment

(b)   tenements (see item 10)

–

–

(c)   investments

–

–

(d)   other non-current assets

–

–

2.2

Proceeds from the disposal of:

–

–

(a)   property, plant and equipment

(b)   tenements (see item 10)

–

–

(c)   investments

–

–

(d)   other non-current assets

–

–

2.3

Cash flows from loans to other entities

–

–

2.4

Dividends received (see note 3)

–

–

2.5

Other (provide details if material)

–

–

2.6

Net cash from / (used in) investing activities

(22)

(22)

3.

Cash flows from financing activities

–

–

3.1

Proceeds from issues of shares

3.2

Proceeds from issue of convertible notes

2,627

2,627

3.3

Proceeds from exercise of share options

–

–

3.4

Transaction costs related to issues of shares, convertible notes or options

(179)

(179)

3.5

Proceeds from borrowings

–

–

3.6

Repayment of borrowings

–

–

3.7

Transaction costs related to loans and borrowings

–

–

3.8

Dividends paid

–

–

3.9

Other (provide details if material)

66

66

3.10

Net cash from / (used in) financing activities

2,514

2,514

4.

Net increase / (decrease) in cash and cash equivalents for the period

16,809

16,809

4.1

Cash and cash equivalents at beginning of period

4.2

Net cash from / (used in) operating activities (item 1.9 above)

(2,358)

(2,358)

4.3

Net cash from / (used in) investing activities (item 2.6 above)

(22)

(22)

4.4

Net cash from / (used in) financing activities (item 3.10 above)

2,514

2,514

4.5

Effect of movement in exchange rates on cash held

–

–

4.6

Cash and cash equivalents at end of period

16,943

16,943

5.

Reconciliation of cash and cash equivalents
at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts

Current quarter
$A’000

Previous quarter
$A’000

5.1

Bank balances

5,443

4,809

5.2

Call deposits

11,500

12,000

5.3

Bank overdrafts

–

–

5.4

Other (provide details)

–

–

5.5

Cash and cash equivalents at end of quarter (should equal item 4.6 above)

16,943

16,809

6.

Payments to directors of the entity and their associates

Current quarter
$A’000

6.1

Aggregate amount of payments to these parties included in item 1.2

(284)

6.2

Aggregate amount of cash flow from loans to these parties included in item 2.3

Nil

6.3

Include below any explanation necessary to understand the transactions included in items 6.1 and 6.2

Payments include executive remuneration (including bonuses), director fees, superannuation and provision of a fully serviced office.

7.

Payments to related entities of the entity and their associates

Current quarter
$A’000

7.1

Aggregate amount of payments to these parties included in item 1.2

–

7.2

Aggregate amount of cash flow from loans to these parties included in item 2.3

–

7.3

Include below any explanation necessary to understand the transactions included in items 7.1 and 7.2

Not applicable

8.

Financing facilities available
Add notes as necessary for an understanding of the position

Total facility amount at quarter end
$A’000

Amount drawn at quarter end
$A’000

8.1

Loan facilities

–

–

8.2

Credit standby arrangements

–

–

8.3

Other (please specify)

–

–

8.4

Include below a description of each facility above, including the lender, interest rate and whether it is secured or unsecured. If any additional facilities have been entered into or are proposed to be entered into after quarter end, include details of those facilities as well.

9.

Estimated cash outflows for next quarter

$A’000

9.1

Exploration and evaluation

(1,500)

9.2

Development

–

9.3

Production

–

9.4

Staff costs

(500)

9.5

Administration and corporate costs

(200)

9.6

Other (provide details if material)
(a)        Business development costs


(150)

9.7

Total estimated cash outflows

(2,350)

10.

Changes in tenements
(items 2.1(b) and 2.2(b) above)

Tenement reference and location

Nature of interest

Interest at beginning of quarter

Interest at end of quarter

10.1

Interests in mining tenements and petroleum tenements lapsed, relinquished or reduced

–

–

–

–

10.2

Interests in mining tenements and petroleum tenements acquired or increased

–

–

–

–

Compliance statement

1        This statement has been prepared in accordance with accounting standards and policies which comply with Listing Rule 19.11A.

2        This statement gives a true and fair view of the matters disclosed.

                        [lodged electronically without signature]

Sign here:         ……………………………………………………                        Date: 31 October 2017

(Director/Company secretary)

Print name:       Dylan Browne

Notes

1.            The quarterly report provides a basis for informing the market how the entity’s activities have been financed for the past quarter and the effect on its cash position. An entity that wishes to disclose additional information is encouraged to do so, in a note or notes included in or attached to this report.

2.            If this quarterly report has been prepared in accordance with Australian Accounting Standards, the definitions in, and provisions of, AASB 6: Exploration for and Evaluation of Mineral Resources and AASB 107: Statement of Cash Flows apply to this report. If this quarterly report has been prepared in accordance with other accounting standards agreed by ASX pursuant to Listing Rule 19.11A, the corresponding equivalent standards apply to this report.

3.            Dividends received may be classified either as cash flows from operating activities or cash flows from investing activities, depending on the accounting policy of the entity.

Prairie Mining #PDZ – Initiation of Coverage. Conviction Buy. Target price 118p

5th September 2017 / Leave a comment

by Align Research

Prairie Mining #PDZ – Initiation of Coverage. Conviction Buy. Target price 118p

“Under the radar” potential world-class hard coking coal supplier with two low-cost projects in Poland to supply Europe’s leading steel makers & a likely acquisition target

Prairie Mining listed in London in 2015 to bring its hard coking coal interests in Poland to the attention of European investors. The company is currently moving its two-impressive large Tier-1 low-cost coking coal projects towards production as early as 2023.

 – Enviable high margin projects at currently strong coking coal prices

Prairie is continuing to advance its two projects towards production and has a world-class partner in China Coal, the second largest coal miner in China. In the current strong coking coal price environment, Prairie looks likely to be an M&A target in our opinion as majors are seeking such world class Tier-1 projects and midcap producers need growth options.

– Close to Europe’s steel makers who rely on imports for 85% of supplies

Europe is a big importer of coking coal from Australia and the US. Coking coal from Prairie’s low-cost Polish projects should attract a premium price due to its quality comparable to coal produced by the majors and far lower transportation costs being on the doorstep of big European steel makers.

– Management has proven expertise in project development & financing

CEO Ben Stoikovich is an ex-BHP coal mining engineer/investment banker whose skills have helped get Prairie where it is today. Managing operations in Poland is Miroslaw Taras, the ex-CEO of the neighbouring Bogdanka coal mine which he turned into Europe’s lowest cost coal producer.

– DCF analysis reveals potential upside of 250%

Discounting forecast cash flows from the two planned coking coal mines and assigning what we consider to be highly conservative risk factors gives a target price of 118p. We thus initiate coverage of Prairie Mining with a Conviction Buy stance.

To read the full note visit http://www.alignresearch.co.uk/cpt-company/prairie-mining/

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