Curragh opens new coal mine

Brokers from central Canada recently had their first look at the new underground coal mine here which will provide security for Curragh Resources’ (TSE) latest private placement.

Cash flow from the Westray mine is estimated to be $10 million per year. It will provide security for a $55-million placement of limited recourse convertible subordinated secured debentures. They are being offered to institutions through securities firm Nesbitt Thomson. The $124-million mine was financed largely by an $80-million loan from the Bank of Nova Scotia and $12 million from the provincial government.

The brokers and other guests were flown in for the mine’s opening ceremonies, at which Curragh Chairman Clifford Frame congratulated mine manager Gerald Phillips for bringing the project to fruition. The mine and the 1-million-tonne-per-year wash plant entered production ahead of schedule and under budget.

Cash flow from the mine will come exclusively from provincially owned utility Nova Scotia Power (NSP). Contract prices and projected costs are not public information, but one analyst estimated costs of delivered coal to be $50-60 per tonne and the contract price to be in the $70-per-tonne range. The first trainload of coal left the property Aug. 30, bound for NSP’s thermal coal-fired electric generating station 11 km away.

During the next 15 years, the company will send one train per day to the 300-MW facility. Each train consists of 30 cars, each carrying 90 tonnes of low-sulphur, low-ash coal.

Under the terms of the contract with NSP, 700,000 tonnes of coal will be shipped per annum (75% of the wash plant’s design capacity). About 170,000 tonnes will be supplied this year.

The company expects to sell the remaining 300,000 tonnes of annual production to regional cement plants and other utilities in the Maritimes. The wash plant, designed and engineered by Kilborn, makes two products of varying quality, a “premium” product containing 0.87 lb. sulphur dioxide per million British Thermal Units (BTUs) and 13.5% ash, and a “regular” coal which contains 0.95 lb. sulphur dioxide per million BTUs and 20% ash. Minable reserves in the seam being worked (the Foord seam) average less than 1% sulphur, 23.8% ash and 11,260 BTUs per lb.

More than half (58%) of the 700,000 tonnes bound for NSP per year will be “regular” coal to fire a new, 150-MW boiler which cost $240 million. The balance will be “premium” coal for an older 150-MW unit.

To monitor product quality, an automated sampling arm in the rail loadout building at the mine retrieves about eight tonnes of coal from the loaded cars. About 95 kg of this sample is then tested at an on-site lab for sulphur, ash and energy content.

The moisture content of the final product is important to the profitability of the mine. Every 1% increase in moisture content reduces, by about 150 BTUs, the amount of available energy in each pound of coal.

Coarse coal is washed in heavy-media baths, medium-sized coal is classified in heavy-media cyclones and fine coal is classified and dewatered in a thickener.

To reduce the moisture content of the final product to 8%, Curragh has installed three WEMCO centrifuges for the coarse and medium-sized coal and one high-speed, stainless-steel, Alfa-Laval centrifuge (the first application of such a machine in the coal industry) for the fine coal.

All outside conveyors are enclosed. The final coal product will be stored in 5,000-tonne capacity concrete silos, protected from the elements. Patrick Whiteway is editor of Canadian Mining Journal, a Southam publication.