Unlisted Australian mining company Riversdale Resources has a motto – “experience pays” – which applies to both its supply chain partners and itself. The team leading the company previously developed four high-quality coal projects in Africa, including the Benga project in Mozambique that it famously sold to Rio Tinto for a large sum. Since then the team has been in North America, exploring and developing new coal projects in Alberta and Alaska.
Riversdale’s primary asset is the Grassy Mountain Coal Project, set within the extensive Crowsnest Pass complex in Alberta. The company acquired Crowsnest Pass in August 2013, having been attracted to its multiple coking coal deposits with the potential of becoming multiple mines. The complex sits in an economically and politically stable mining region, with an active resources industry, a clear mine approvals process and a community accepting of coal mining.
The 35,000 acres of Crowsnest Pass are located about 30 kilometres east of Teck’s Elkview and Coal Mountain mines and contain four properties: Grassy Mountain, Adanac, Bellevue and Lynx Creek. Managing Director Steve Mallyon explains that while all four properties are “attractive, with the same kind of high-quality, hard coking coal,” Grassy Mountain was prioritised due to its large size and proximity to infrastructure.
“Grassy Mountain offers us a very large, open-cut mine with at least a 25-year life, and it’s only a couple of kilometres from a major rail system. That makes the logistics of getting the product to a port much simpler than it would be for the others, which all present challenges in terms of rail access.”
The rail line nearby Grassy Mountain goes straight to Westshore Terminal, a well-established port in Vancouver with 36mtpa capacity and the ability to handle capesize ships. Riversdale has signed a 10-year agreement with the port allowing it to ship 4 million tonnes per annum (mtpa) of product.
Another advantage of Grassy Mountain, adds Stephen, is that it “has a fair amount of drilling already completed”. The area had 364 holes drilled in it for a total of 45,720 metres in the 1950s. Since acquiring the project in August 2013, Riversdale has added another 80 holes and taken four bulk samples.
Riversdale submitted its Environmental Impact Assessment for Grassy Mountain in September 2015, and completed its Feasibility Study in early November. It was helped in these tasks by a selection of trusted partners: McElroy Bryan Geological Services worked on geological modelling; Bob Leach Pty Ltd on coal quality analysis and planning; Corky’s on coal valuation for buyers; Xenith on open pit modelling; Golders Associates on hydrology; Millennium EMS Solutions on environmental impact; and Sedgman on process infrastructure design. Merjent, a First Nations Advisor has worked with Riversdale for more than two and a half years on a comprehensive consultation process with five First Nation Communities in the region.
The feasibility study lays out a plan for a 4mtpa mine with a lifespan of at least 25 years, with scope to grow as reserves are expanded. Hard coking coal will be its only product, which Steve says is a significant advantage.
“Hard coking coal attracts a premium price over other coal products that come lower on the value scale. This also means the logistics are simple: we load one product onto a train, have a single stockpiling area at Westshore Terminal, and we can focus on the premium end of the market, rather than having to divert some attention to the other end.”
Washed, prepared and blended bulk samples of Grassy Mountain coal have been sent to about a dozen global steelmakers for testing. “This is a piece of collaborative research with some of the world’s leading steelmakers to identify where exactly Grassy Mountain coal is going to be utilised in the blend that steelmakers use for coking,” Stephen explains.
“We chose steelmakers who we feel will like the product – not just from a quality point of view, but from a cost of delivery point of view as well. We have an excellent relationship with Westshore Terminal and the port is already well utilised by steelmakers in North Asia and Brazil, so we made them our target market.”
Finally, Riversdale has completed significant work with the local community that has helped earn their support. Stephen says the local councils view Grassy Mountain as important for not only generating tax revenue, but also creating jobs and income through local procurement.
This community engagement has also involved a large body of work on traditional knowledge and use with the local First Nations groups. Stephen says Riversdale has developed a very good relationship with them, and is excited to bring them into the project as it grows.
“We see this as a real opportunity to bring the original land holders into the project, to help us to build it,” he says. “In Mozambique, we trained up 1,400 local young people over the years. We want to repeat that success here. We’re not worried about local development quotas – my only concern is that First Nation communities will be unable to supply enough workers at project commissioning in 2019!”
The road ahead
Grassy Mountain now needs to get through permitting, but Stephen and the team are optimistic that this won’t take too long. “There’s not a lot of competition for the regulator’s attention right now, and we know the regulatory process here is comprehensive yet is also streamlined, as key regulatory agencies are staffed with experienced people,” he says. “Our expectation is that we could start mine construction in late 2017, and start shipping coal in the first half of 2019.”
The company’s geological team will start work on the other Crowsnest Pass properties as Grassy Mountain enters construction. Riversdale also has another, less advanced coal project in Alaska called Chickaloon. This is currently on hold due to requiring more investment and development time than Riversdale’s other projects; but it remains an attractive prospect for growth when the coal price improves.
Incidentally, Stephen is hopeful that steelmaking coal will regain some value at around the time that Grassy Mountain enters commissioning. In these circumstances, the company might look again at listing. Riversdale previously made an attempt to list in 2013, but a sharp fall in the market prevented it from gaining traction.
“We’ve come a lot further since then and now have a really coherent story; yet the market still doesn’t lend itself to the listing of a steelmaking coal company,” Stephen remarks. “Having said that, the market is quite adept at predicting the turnaround – it’s usually about 18 months out – and that’s the time we’ll likely consider an IPO, in 2017. It’s something we might consider as a pathway to funding the project.”
Riversdale currently has two loyal major shareholders in Macquarie Bank and Resource Capital Funds, who have helped the company get to where it is today. Whatever happens in the markets, Stephen is confident that Grassy Mountain will be another success for the Riversdale team.
“What we have at Grassy Mountain is nowhere near the size of the Benga project in terms of resource, but the logistics are world-class and the product quality is fantastic,” he says.
“Here we have the platform to build a significant company, because there’s only a handful of hard coking coal producers with more than 4mtpa output, so we’d be in esteemed company. If we continue to build a good base and a great development team, as we’re doing at the moment, I don’t see major obstacles to developing Grassy and other developments in Alberta and perhaps other parts of North America.”