Coal Asia finds P4.1-B reserves in Mindanao

MANILA, Philippines - Listed Coal Asia Holdings Inc. has found P4.1 billion worth of coal reserves in a portion of its mining area in Mindanao.

In an updated evaluation of its mineable coal reserves, Coal Asia said 400 hectares out of its 13,000-hectare coal concession in Davao Oriental is feasible for mining given current prices.

“Given the results of this latest study, it appears that Coal Asia is well on its way to exceeding an earlier independent valuation by Multinational Investment Bancorporation, which had valued the company at P12.5 billion considering the entire 13,000 hectares in Davao Oriental and Zamboanga Sibugay,” the miner said.

Subsidiary Titan Mining & Energy Corp. earlier commissioned a full feasibility study through an independent third-party consultant to reevaluate the Bactinan and Macopa coal deposits that have an estimated mine life of 10 years.

“Despite the recent volatility of coal prices, the key financial indicators of the Bactinan and Macopa coal deposits, as determined by the feasibility study, speak volumes of the lucrative nature of this project,” said Coal Asia chairman Harald Tomintz.

The 400-hectare portion of the mine will have an internal rate of return of 115.27 percent and a payback period of 0.88 years, Coal Asia said.

The holder of the mining rights for the country’s second largest coal project in terms of resources and reserves expects commercial production to start this October instead of the January 2014 target date.

If the nine other coal-bearing basins contain sizeable reserves, the mine life of the coal project can be extended to as much as 50 years, the company said.

“The updated study confirms Titan’s coal proven reserves stands at five million metric tons (MT), which is just a fraction of the whole 123 million MT resource and reserve figure identified in the Philippine Mineral Reporting Code standard geological report done in April 2012,” Coal Asia said.

Coal Asia, through Titan, projects to produce 600,000 MT of high grade coal per year. It already secured offtake contracts for coal from domestic and international customers and is looking to export to India, Japan, Taiwan, Hong Kong and Vietnam.

Coal Asia earlier announced a net income of P500 million with the start of the Davao coal mine operations in 2014.

Part of the P726.87 million net proceeds from the coal miner’s initial public offering last year will also be used to bring the Zamboanga Sibugay mine to commercial operations in 2015.

The Department of Energy is pursuing energy independence and sustainability through the development of indigenous energy resources like coal, petroleum and natural gas.

To date, the Philippines is producing only 7.61 million MT of coal annually, way below the demand of around 14 million MT, according to the Philippine Chamber of Coal Mines.

There are only two major coal producers in the country: Semirara Mining Corp. in Antique and the Philippine National Oil Co.-Exploration Corp. in Zamboanga Sibugay.