www.reyresources.com
Rey Resources (ASX: REY) is thermal coal development company with a large resource and major land position of 8,000km2 in the emerging Canning Basin of Western Australia. A Pre Feasibility Study on the firm’s maiden 511Mt JORC resource at Duchess Paradise was completed in January 2010 and revealed a 2Mtpa highwall mining export thermal coal operation, commencing production in 2013, to be financially robust. Capital costs are estimated at A$113 million and operating costs at A$60/t FOBT Derby, where Rey has its own port and loading facility. A major exploration program in 2010 over 100kms of subcrop will seek to extend the 8 year life of the proposed operation and add new resources.
Rey Resources in pre-open pending capital raising announcement
Rey Resources (ASX: REY) has been granted a trading halt by the ASX pending a capital raising announcement, with the company's shares placed in pre-open.
Rey has not yet indicated where the new capital injection will be allocated, but the company earlier this week reached a Definitive Feasibility Study milestone at Duchess Paradise.
The study, which commenced in early 2010, proposes a highwall mining operation producing 2.0 to 2.5 million tonnes of 5,500 kcal/kg thermal coal per year to be exported via the company’s existing port infrastructure at Derby in Western Australia.
The study was undertaken by consultants Marshall Miller & Associates Inc. and confirms the prospect of a longer life project and increased economic and employment opportunities for the area.
It proposes an initial operation with a longer mine life of at least 10 years, an ungeared NPV (10% discount rate) of A$176 million (after taxes and MRRT), an internal rate of return of 27%, and a payback of 3.4 years.
Significantly, Rey is now looking to extend the mine life beyond 10 years through further exploration of the company's land holding.
Production costs are estimated at A$70 per tonne.
