Results of Anthracite StudyFortune Minerals announces results of anthracite coal marketing study
Thursday July 22, 12:53 pm ET
TSX, Symbol "FT" Issued Capital: 25,807,730
LONDON, ON, July 22 /CNW/ - Fortune Minerals Limited announces that Marston Canada Ltd. (Marston) has completed a marketing study for the Company's 100% owned, "world class" Mount Klappan anthracite coal project in northwest British Columbia. Mount Klappan contains high-quality, low-sulphur anthracite rank coal in four known deposits, including 230.9 million tonnes classified as Measured and Indicated, 359.5 million tonnes classified as Inferred, and 2,213 million tonnes in the Speculative class. The deposits straddle the BC Rail right-of-way, 150km northeast of the port of Stewart, and 330km northeast of the port of Prince Rupert. The Canadian National Railway Company is expected to close their acquisition of BC Rail shortly. The purpose of the marketing study was to provide a description of key markets, customers and expected prices to be used in an updated feasibility study, and also to identify customers for products from the proposed open pit mine and wash plant. A summary of the highlights from this study is presented below.
- Anthracite represents only about 1% of world coal reserves and is a
premium product with the highest rank by carbon and energy content and
lowest volatile content of all coals.
- Anthracite has diverse markets including, the steel industry, as a
reductant used in metallurgical processing, smokeless fuels for space
heating, cooking and heating briquettes, carbon filters for water
purification, carbon electrodes for metal refining, carbon materials,
and fuels used in power generation and the manufacture of cement and
lime.
- World anthracite production in 2003 increased 4.5% over the prior year
to 305 million tonnes, most of which was mined in 5 major producing
countries.
- China is the largest producer of anthracite accounting for 70% of
world production, but is now a net importer of metallurgical coals.
- World anthracite import-export trade was nearly 18 million tonnes in
2002, an increase of 11.3% over the prior year and growth has
continued into 2003 and 2004.
- Anthracite is consumed in almost 60 countries, many of which rely
solely on imports to satisfy domestic demand.
- The Asian region is undisputedly the worlds largest anthracite market,
accounting for 63% of world imports in 2002.
- While there is capacity to increase production in some of the major
producing countries, dwindling reserves and high mining costs should
lead to declining production in the minor producing countries.
- Furthermore, economies in the Asian region are continuing to grow
strongly, and although some of these countries are leading anthracite
producers, it is likely that future demand will exceed available
regional supply and require increased imports from other sources.
- The fastest growing market for anthracite is feedstock for blast
furnaces in the steel industry, specifically pulverized coal injection
(PCI) and blend coal for metallurgical coke production.
- Growth in demand for PCI applications should continue to be strong in
the major Asian steel making countries as increasing amounts of steel
are required and technological improvements allow higher PCI injection
rates.
- Growth in the demand for PCI has been twice the rate of growth for
hard coking coal, and the high carbon and low volatile content of
anthracite makes it generally more desirable for PCI use than lower
ranked bituminous coals.
- Anthracite is also favoured for direct iron reduction (DIR) processes
used to make pig iron in mini steel mills.
- There is good potential to develop markets for Mount Klappan
anthracite in Canada and the USA in steel industries concentrated
around the Great Lakes region.
- In general, steel makers in Japan, China, Korea and other Asian
countries, and to a lesser extent in Canada, USA, Brazil and Europe
are the prime markets for Mount Klappan anthracite produced with less
than 10% ash content.
- There is also good potential to develop markets for Mount Klappan
anthracite in specialty applications in metallurgical processing,
cooking briquettes, pelletizing and carbon filters.
- Coal prices have soared over the past 2 years and are expected to
remain strong through 2007, particularly as a result of China's
economic growth, but also due to economic recovery in Japan, Southeast
Asia, North America and Europe, and weakening of the US dollar.
- Mount Klappan PCI products should command prices near those of coking
coals, which currently trade on the spot market at prices of between
US$65 and US$100/tonne (FOB port).
- Premium anthracite products for specialized applications will range in
price between US$75 and US$250/tonne (delivered).
Fortune Minerals acquired a 100% interest in the Mount Klappan project in 2002 from a Canadian subsidiary of ConocoPhillips, following their earlier takeover of Gulf Canada Resources Limited. The transaction was completed during a period of low coal prices and little investor interest. Gulf carried out significant work at Mount Klappan between 1981 and 2001, including resource delineation, test burns, and transportation, marketing, environmental and feasibility studies. A 200,000 tonne bulk sample was collected in 1985-86 and product quality verified in 100,000 tonnes of finished coal products produced in a pilot plant constructed at the site for trial shipments to select customers in North America, Asia and Europe. Fortune is very pleased to have acquired such an exceptional asset in Mount Klappan and position the Company to participate in a favourable coal market with strengthening prices. Plans are proceeding with preparation of an updated bankable feasibility study.
Marston Canada Ltd. is a subsidiary of Marston and Marston Inc., a St. Louis based full-services mining consulting organization with offices in the U.S.A., Canada and Australia. Marston furnishes management consultation, engineering, geologic, environmental, and coal market and contracts services to the mining industry with an emphasis on the coal and oils sands industries. Richard Marston P.E. is the Qualified Person and has read and approved the contents of this release.