TIDMPDZ
RNS Number : 4114D
Prairie Mining Limited
31 January 2018
PRAIRIE MINING LIMITED
NEWS RELEASE | 31 January 2018
DECEMBER 2017 QUARTERLY REPORT
HIGHLIGHTS FROM AND SUBSEQUENT TO THE QUARTER:
Debiensko Mine (Premium Hard Coking Coal)
-- During the quarter Poland's newly appointed Prime Minister,
Mr Mateusz Morawiecki, officially presented the Ministry of
Development's "Program for Silesia" in December 2017 which included
a strategy for the re-start of a major coking coal mine in the
Upper Silesian region, where Prairie's Debiensko project is
located, and highlighted the positive social and economic impacts
that mine development would have on the region
-- Mine site redevelopment planning continued to advance with
completion of initial demolition works, pre-qualification of study
contractors, and preparation for an infill drill program to
increase JORC Measured and Indicated Resources
-- Prairie continued discussions with steel makers and coke
producers throughout the quarter for future coking coal sales and
offtake
Jan Karski Mine (Semi-Soft Coking Coal)
-- Environmental permitting for Jan Karski advanced following
successful submission of the Environmental and Social Impact
Assessment to the Lublin Regional Environment Directorate for
Environmental Consent
-- Preparation of the Mining Concession application is underway
and anticipated to be lodged during the first quarter of 2018
-- Prairie initiated public consultations in local
municipalities for the development of the Jan Karski Mine,
demonstrating that a new mine would bring significant employment
opportunities and economic development
-- China Coal's technical studies for the construction of the
Jan Karski Mine have significantly advanced and Prairie is
currently reviewing study documents provided by China Coal. The
studies will be revised to incorporate the latest coal quality
results from drilling at Jan Karski as well as any conditions
stipulated in the Environmental Consent and the Mining Concession
to be granted for Jan Karski
-- During the quarter, Prairie hosted a delegation in Poland
including China Coal and Jinan Mine Design Institute during which
offers for project works involving Polish subcontractors were
finalised
Robust Coking Coal Fundamentals
-- Hard coking coal prices continued to trade at price levels above US$225/t FOB Australia
-- Market analysts forecast underinvestment in new coking coal
mine development has potential to result in sustained high coking
coal prices
-- European Commission continues to designate coking coal as a
Critical Raw Material in its 2017 review
-- The Polish Government strongly supports development of new,
modernised coal mines, as announced in the "Program for Silesia"
produced by Poland's Ministry for Development
Corporate
-- Prairie remains in a financially strong position with cash reserves of A$15.1 million
-- With CD Capital's right to invest a further A$68 million as a
cornerstone investor, plus with the Strategic Co-operation
Agreement between Prairie and China Coal for financing and
construction of Jan Karski, Prairie is well positioned to progress
with its planned development activities at Debiensko and Jan
Karski
Ben Stoikovich, Chief Executive Officer commented "Following the
submission of the ESIA and initiation of public consultations,
Prairie continues towards applying for a Mining Concession to
commence construction of the Jan Karski Mine together with our
strategic partner China Coal. China Coal's Technical and Economic
Studies have progressed positively, and our team is in the process
of preparing a full Mining Concession application for Jan Karski.
At Debiensko, we continue to plan our mine site redevelopment
program in a positive market environment with increased coking coal
demand from Europe's steel producers coupled with reducing European
supply. We welcome the news that the Polish government have
officially included the re-start of a coking coal mine in the
"Program for Silesia", the region where our Debiensko project is
located."
For further information, please contact:
Prairie Mining Limited +44 20 7478 3900
Ben Stoikovich, Chief info@pdz.com.au
Executive Officer
Sapan Ghai, Head of
Corporate Development
Debiensko MINE
The Debiensko Mine ("Debiensko") 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 Jastrz bska Spó ka W glowa 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 ("Prairie" or "Company") 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.
Re-start of a Coking Coal mine included in "Program for Silesia"
and new political appointments in Poland
Prairie notes that on 11 December 2017, the Polish government
appointed a new Prime Minister, Mr Mateusz Morawiecki, who
immediately prior to his current role, was Deputy Prime Minister
and Minister of Development and Finance in Poland. Prairie also
notes that on the 9 January 2018, a new Minister of Environment, Mr
Henryk Kowalczyk, was appointed as part of a cabinet reshuffle
under the new Prime Minister. In Poland, responsibility for
exploration and mining concessions is the responsibility of the
Ministry of Environment.
Following his appointment, Prime Minister Mateusz Morawiecki,
presented the Polish Ministry of Development's "Program for
Silesia" ("Program") - a strategic document which anticipated the
re-construction of a coking coal mine in the region of Upper
Silesia, where Debiensko is located. The Program details the
creation of 1,500 direct jobs in the region and indicates the
social and economic benefits of re-construction of a coking coal
mine, and to potentially be funded by foreign and Polish
capital.
Preparation for the Next Phase of Project Studies
Following completion of a 28 shallow geo-technical drill program
in the previous quarter, Prairie continued to analyse the drill
hole data which will be used for engineering design of foundations
of 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 also continued throughout the
quarter including contractors for the:
-- In-fill drilling program (to update measured and indicated resources);
-- CHPP;
-- Shafts and bulk coal winder;
-- Desalination plant; and
-- Surface facilities.
Demolition works continued throughout the quarter specifically
targeting old structures including walkways and old administrative
buildings. To date, Prairie has completed demolition works on a
number of old surface structures of the former Debiensko mine
including the bathhouse, switchgear building and locomotive
garage.
Sale of Non-Core Land
Through the acquisition of Debiensko in 2016, Prairie obtained
land tenements within the village of Kaczyce which were considered
non-core to the construction, restart and operations of the
Debiensko Mine. During the quarter, the Company agreed the sale of
the non-core land for consideration of PLN1.4 million (A$500,000).
Prairie has received the consideration and ownership of the land is
expected to be transferred by the end of the next quarter.
JAN KARSKI MINE
Submission of ESIA & Initiation of Public Consultation
An application for issuing the environmental decision together
with the Environmental and Social Impact Assessment ("ESIA") was
submitted to the Regional Director for Environmental Protection
("RDOS") in Lublin in October 2017. Taking into account the RDOS's
additional comments the motion and ESIA were supplemented in late
November 2017. The Environmental Consent process has now officially
been initiated by RDOS.
Prairie is now waiting for approval of the ESIA in the form of
an Environmental Consent decision, which is the last component to
meet all formal requirements to apply for the Mining Concession for
construction for the Jan Karski Mine ("Jan Karski").
As part of the environmental permitting process, Prairie
initiated public consultations in three municipalities, including
Wierzbica, Siedliszcze and Cyców. Presentations on Jan Karski's
development plans were given by Mr Miroslaw Taras (Prairie's Group
Executive), Witold Wo oszyn (Prairie's Environmental and Planning
Manager) and specialists from the international environmental
consulting group, Multiconsult Polska who 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.
China Coal Progress and Financing Discussions
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 locally
provided content for construction of Jan Karski was finalised
alongside domestic Polish specialists, subcontractors and partners
who will provide relevant Polish content.
China Coal's technical studies for the construction and funding
of the Jan Karski Mine have significantly advanced and Prairie is
currently reviewing study documents ("Studies") received from China
Coal subsequent to the quarter end. In accordance with the
Strategic Co-operation Agreement between Prairie and China Coal,
the Studies will form the basis for provision of debt financing out
of China for the construction and development of Jan Karski. The
Studies are being undertaken in accordance with Chinese official
mine design and banking standards for coal mine projects, and to
comply with domestic Polish engineering standards and standards for
mechanical and electrical equipment. The terms of the Environmental
Consent and Mining Concession for Jan Karski will be incorporated
into the final engineering design, as well as results from the
latest coal quality and hydrogeological drilling works being
conducted by the Company.
Prairie and China Coal continue to advance discussions with
Chinese banks to provide debt facilities to fund construction of
the Project and enter into a complete Engineering, Procurement, and
Construction ("EPC") contract under which China Coal would
construct the Jan Karski Mine.
CORPORATE
Financial Position
Prairie has cash reserves of A$15.1 million. With CD Capital's
right to invest a further A$68 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.
APPIX 1 - EXPLORATION TENEMENT INFORMATION
As at 31 December 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 100 Granted Exclusive Right to apply for a
(K-4-5, K-6-7, K-8 and K-9)* 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 Kaczyce 1 100 Granted Mining & Exploration (includes
gas rights)
------------------- ------------------------------- -------------------- -------- --------------------------------
* On 1 July 2015, the Company announced that it had secured the
Exclusive Right to apply for a mining concession for Jan Karski. As
a result of its geological documentation for the Jan Karski deposit
being approved, Prairie is currently the only entity that can lodge
a Mining Concession application over Jan Karski 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
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
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.
** 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 was to occur by 1 January 2018. Not
commencing production by January 2018 does not immediately infringe
on the validity and expiry date of the current Mining Concession,
which is June 2058. However, the concession authority has the right
to request the concession holder to reasonably remove any
infringements related to non-conformance with the conditions of a
Mining Concession and determine a reasonable date for removal of
the infringements (under Polish law, the concession authority is
required to provide a reasonable timeframe to remedy any
non-compliance taking into account the nature of the
non-conformance). Failure to remedy the infringements within any
reasonable time frame prescribed by the concession authority may
lead to commencement of proceedings to limit or withdraw of a
concession. In December 2016, the Company submitted an application
to the MoE to amend the Debiensko Mining Concession to alter the
date for commencement of production from 2018 to 2025, and has
provided the MoE with additional information requested. A decision
from the MoE is currently pending following a change in the Polish
Prime Minister in December 2017 and the appointment of a new
Minister of Environment in January 2018.
+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 31 December 2017
--------------- ------------------------
Consolidated statement Current quarter Year to date
of cash flows $A'000 (6 months)
$A'000
--------------------------------------- ---------------- -------------
1. Cash flows from operating
activities
1.1 Receipts from customers - -
1.2 Payments for
(a) exploration & evaluation (1,339) (2,954)
(b) development - -
(c) production - -
(d) staff costs (478) (1,083)
(e) administration
and corporate costs (200) (440)
1.3 Dividends received - -
(see note 3)
1.4 Interest received 83 203
1.5 Interest and other - -
costs of finance paid
1.6 Income taxes paid - -
1.7 Research and development - -
refunds
Other (provide details
1.8 if material) (208) (526)
(a) Business development
costs 107 248
(b) Property rental
and gas sales
---------------- -------------
Net cash from / (used
1.9 in) operating activities (2,035) (4,552)
----- -------------------------------- ---------------- -------------
2. Cash flows from investing
activities
2.1 Payments to acquire:
(a) property, plant
and equipment (40) (62)
(b) tenements (see - -
item 10)
(c) investments - -
(d) other non-current - -
assets
2.2 Proceeds from the disposal
of:
(a) property, plant
and equipment 272 497
(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)
---------------- -------------
Net cash from / (used
2.6 in) investing activities 232 435
------- ------------------------------ ---------------- -------------
3. Cash flows from financing
activities
3.1 Proceeds from issues
of shares - -
Proceeds from issue
3.2 of convertible notes - 2,627
3.3 Proceeds from exercise - -
of share options
Transaction costs related
to issues of shares,
convertible notes or
3.4 options - (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)
---------------- -------------
Net cash from / (used
3.10 in) financing activities - 2,448
------- ------------------------------ ---------------- -------------
4. Net increase / (decrease)
in cash and cash equivalents
for the period
Cash and cash equivalents
4.1 at beginning of period 16,943 16,809
Net cash from / (used
in) operating activities
4.2 (item 1.9 above) (2,035) (4,552)
Net cash from / (used
in) investing activities
4.3 (item 2.6 above) 232 435
Net cash from / (used
in) financing activities
4.4 (item 3.10 above) - 2,448
4.5 Effect of movement
in exchange rates on - -
cash held
---------------- -------------
Cash and cash equivalents
4.6 at end of period 15,140 15,140
------- ------------------------------ ---------------- -------------
5. Reconciliation of cash Current quarter Previous
and cash equivalents $A'000 quarter
at the end of the quarter $A'000
(as shown in the consolidated
statement of cash flows)
to the related items
in the accounts
---- ------------------------------- ---------------- ---------
5.1 Bank balances 3,640 5,443
5.2 Call deposits 11,500 11,500
5.3 Bank overdrafts - -
5.4 Other (provide details) - -
---------------- ---------
Cash and cash equivalents
at end of quarter (should
5.5 equal item 4.6 above) 15,140 16,943
---- ------------------------------- ---------------- ---------
6. Payments to directors of the entity Current quarter
and their associates $A'000
----------------
Aggregate amount of payments to
these parties included in item
6.1 1.2 (169)
----------------
6.2 Aggregate amount of cash flow Nil
from loans to these parties included
in item 2.3
----------------
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 Current quarter
the entity and their associates $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 Total facility Amount drawn
available amount at at quarter
Add notes as necessary quarter end end
for an understanding $A'000 $A'000
of the position
--------------- -------------
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 $A'000
for next quarter
---- ------------------------------ --------
9.1 Exploration and evaluation (1,500)
9.2 Development -
9.3 Production -
9.4 Staff costs (500)
Administration and corporate
9.5 costs (200)
Other (provide details if
material)
(a) Business development
9.6 costs (200)
--------
9.7 Total estimated cash outflows (2,400)
---- ------------------------------ --------
10. Changes in Tenement Nature of Interest Interest
tenements reference interest at beginning at end
(items 2.1(b) and location of quarter of quarter
and 2.2(b)
above)
----- ---------------------- -------------- ---------- -------------- ------------
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 January 2018
(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.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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