Oracle Coalfields feasibility study underlines Sindh Thar’s technical and economic viability

Karachi: UK-based Oracle Coalfields says results of feasibility study on its Thar Coalfield in Sindh Province underlined its “technical and economic viability”. Total capital expenditure for an open-cast development is estimated at US$610 million, including US$224 million for mining equipment.

This will allow the company to produce five million wet tonnes of lignite coal per year. However, plan initially at least is to mine around 1 million tonnes a year from 2013, which will be sold to Lucky Cement and used to heat its kilns.

Total cash costs are put at US$42.21 per wet tonne, and life of mine is estimated at 23 years. Feasibility study said there is JORC-defined 529 million wet tonnes in mining area. It has a gross calorific value of 3,182k calories per wet kilogram, with ash content at 5.89 percent and sulphur at 0.91 percent. The product has been confirmed as suitable for power generation.

Chief executive Shahrukh Khan said: “This is another important step for Oracle as we look to provide a sustainable source of energy to Pakistan and bring its first large scale open-pit coal mine into production. Feasibility study indicates technical and economic viability of mining project. Further work is continuing to refine overall project economics, specifically in respect of off-take agreements with respect to power plant; and mining contractor opportunities, prior to making any definitive announcements on overall economics. Sindh government in recent published announcements recognizes a Project IRR in excess of 20 percent assuming completion of certain financing milestones.”

The company is currently working on a bankable feasibility study as it seeks funding required for project. Citigroup Global Markets has been brought on board to find a “comprehensive funding solution” for the project. It underlines significance of Thar as a potential supplier of cheap energy to developing Pakistan economy. It contains lignite coal, which is brown in colour and has lower calorific value than thermal coal that goes for export.

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