Australia-based Paringa Resources has signed $220m agreement to sell coal from the proposed Buck Creek No.1 Mine in the US, to PPL’s subsidiaries Louisville Gas and Electric (LG&E) and Kentucky Utilities (KU).
Under the fiver-year deal, Paringa will supply 4.75Mt of its 11,200btu/lb product to the firms.
In particular, the company will deliver 750,000t of coal in 2018 followed by another 1,000,000t each year from 2019 to 2022.
Paringa Resources president and CEO David Gay said: “The contract is the culmination of over a year of due diligence, negotiations, documentation and approvals on both sides.”
“Full production of 3.8 million tonnes per annum is expected around 2020.”
The mine is scheduled to reach full production capacity of 3.8Mtpa by around 2020.
The latest agreement includes standard project development milestones which comply with the proposed Buck Creek No.1 Mine construction program.
As part of the deal, LG&E and KU will monitor the company’s performance in meeting the milestones during developing the Buck Creek No.1 mine.
However, the firms have the right to terminate the agreement in case the performance fails to achieve the agreed milestones.
According to Paringa, the coal handling and preparation plant of the mine has been redesigned as part of a pre-feasibility study (PFS) to produce both a fully-washed and a blended product.
Paringa expects the contracted fixed coal sales prices to be $44.50 per ton in 2018 for its 11,200btu/lb coal spec.
The price is expected to increase to $48.20 in 2022, the company noted.
Located in the Western Kentucky region of the Illinois Coal Basin, the Buck Creek mining complex has a Joint Ore Reserves Committee (JORC) measured and indicated coal resource estimate of 211mt of thermal coal.