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Whitehaven Coal Limited : Annual Report 2010
10 NARRABRI MINE Whitehaven (operator) 70.0%; Electric Power Development Co. Ltd 7.5%; EDF Trading 7.5%; Upper Horn Investments Limited 7.5%; Daewoo International Corporation and Korea Resources Corporation 7.5% The construction of Narrabri Stage 1 is complete, with the exception of the final section of the third access drift. First coal production was achieved by continuous miner on 28 June 2010 and the second continuous miner unit went underground on 16 August 2010. Except for the cost of the underground access drifts, construction costs for Narrabri Stage 1 were within budget. As previously outlined, adverse ground conditions were encountered during drift construction, with the consequential delay resulting in additional costs for this component of the project. Total Stage 1 investment was approximately $227million. An amended Stage 1 approval for Narrabri was received in March 2010, allowing construction of the Stage 2 CHPP, ventilation shaft and other ancillary works to proceed. The full Stage 2 approval for longwall mining was granted by the NSW Minister for Planning, The Hon Tony Kelly MLC, on 28 July 2010. The Stage 2 longwall equipment was specified and ordered in September 2009 and delivery is expected to commence in January 2011, with installation underground scheduled for the September quarter of FY11. The Bucyrus longwall ordered for Narrabri is designed to allow retro-fitting of top coal caving (TCC) equipment in the future. TCC is a proven method of extracting thick-seam coal by longwall methods, but its applicability at Narrabri will only be proven following further technical work and operational experience. If suitable for Narrabri, TCC has the potential to substantially increase the Narrabri mine's coal reserves and annual production in the future. Most of the other Stage 2 equipment and construction contracts have now been tendered and awarded, including the contract for the Narrabri coal handling and preparation plant ("CHPP"). The final design for the Narrabri CHPP includes a dense medium cyclone unit to allow the production of up to 40% of PCI coal. Construction of the plant is expected to be completed in May 2011. Ongoing review of Stage 2 costs, including tendering for all major components of the work, has not identified any material change to the budget cost estimate of approximately $300 million (100% basis). A detailed analysis of surface to in-seam (SIS) gas drainage results achieved at Narrabri over the last nine months has been carried out to produce an updated model of in-situ gas content and drainage patterns. Gas drainage to date has been successful in reducing gas content substantially with most test samples now showing gas content well below the required level. The increasing database of gas drainage results is allowing future gas drainage plans to be developed with a high level of confidence. DEVELOPMENT PROJECTS Vickery Whitehaven 100% Whitehaven's agreement with Coal & Allied Industries Limited (CAIL) to acquire the Vickery Coal Project ("Vickery") for $31.5 million cash plus approximately 1,150 ha of land was completed in January 2010. The Vickery assets acquired comprise Authorisation 406 (A406), Coal Lease 316 (CL316), approximately 3,450 ha of associated land and 399 megalitres per year of water licences. Whitehaven holds several coal tenements adjacent to CL316 and Vickery is an important "bolt- on" acquisition for Whitehaven. It consolidates the company's significant tenement holding in the Gunnedah region. An initial JORC open cut resource of 272.7 million tonnes has been identified. Indications are that Vickery could provide Whitehaven with a significant increase in metallurgical coal reserves. There are nine coal seams contained within the Vickery tenements of which three, the Shannon Harbour, Stratford and Cranleigh seams, are believed to have economic potential. The quality of these coal seams ranges from high volatile soft coking coal to low ash, high energy thermal coal. MANAGING DIRECTOR'S REPORT
Annual Report 2009
Annual Report 2011