Good news for Cardero’s Peace River coal project

Frik Els | September 23, 2012 | 9:28 pm Energy Canada Coal 
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Cardero Resource Corp (TSX:CDU)(NYSE MKT:CDY) was gearing up for a good Monday on the markets after releasing a positive prefeasibility study on Sunday afternoon.

In anticipation of the announcement, the Toronto and New York-listed company gained 4% in heavy volumes on Friday affording it a market value of $72 million.

The Vancouver-based company’s Carbon Creek project in the north east of the Canadian province of British Columbia’s Peace River region  showed marked improvements in key areas compared to earlier studies:

  • Increased Measured & Indicated Resource from 166Mt to 468Mt
  • Established initial Proven and Probable Reserve of 121Mt (initial 20 year mine life)
  • Increased average clean coal production rate from 2.9Mtpa to 4.1Mtpa (2016 to 2034)
  • Total clean coal production currently estimated at 78.4Mt over mine life
  • Percentage of hard coking coal increased from 35% to 60% of planned production
  • Pre-production capital reduced to $217M from $301M
  • Capital of $475M required to bring the project to full production
  • Reduced operating cost from $114 to $110/tonne FOB
  • First coal production planned for Q4 2014
  • Positive cash-flow within three years of production
  • Base case NPV8 $633M on a post-tax, post NPI basis, with 23.7% IRR
  • Undiscounted cash flow valuation of $2,132M

In June last year the explorer completed the acquisition of private firm Coalhunter Mining, which owned the majority of Carbon Creek.

Cardero also has gold, copper and iron ore projects in Peru, Mexico and Argentina.

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