It is reported that emerging coal producer Jameson Resources has expanded the mine case Feasibility Study at its Basin Thermal Coal Mine located in British Columbia.

Norwest Corporation will now complete the feasibility study on an expanded mine case at an optimized level of production. This work is anticipated to be completed in 1Q 2010. Initial start up production rate is planned at 500,000 tonnes per annum with potential ramp-up to a targeted 1 million tonnes per annum.

Mr John Holmes MD of Jameson said preliminary estimates support a robust cash operating margin of approximately USD 20 per tonne based on late 2010 futures contract pricing of thermal coal. He said that discussions with potential domestic and international buyers of coal to be produced from Basin are continuing.

The anticipated start date of commercial production at Basin is late 2010.

Capital costs for new wash plant, rail load out facility and the other infrastructure required to recommission mine are estimated at a relatively modest USD 20 million. Australian capital costs per tonne of production are often three times the cost of Basin to bring into production.

Jameson said preliminary estimates of the capital required of USD 8 million to USD 12 million to refurbish the existing wash plant suggest that the construction of a more efficient larger capacity plant will deliver enhanced project economics.

With firming thermal coal prices of similar quality to Basin, futures contracts for delivery late 2010 are trading at approximately USD 85 per tonne and over USD 100 per tonne for delivery in 2012, markets are expecting a rise in coal prices going forward, provides greater confidence in cash margin. This would see an operating cash margin of around USD 20 per tonne for Basin coal.

(Sourced from www.proactiveinvestors.com)