US-based coal miner Peabody Energy has approved a further $109-million for capital expenditure (capex) at its North Goonyella mine, a hard-coking coal longwall operation in Australia, and agreed to acquire an adjacent coal deposit from Stanmore Resources.
The new capex estimate for the North Goonyella development project is $489-million, the company reported on Thursday, citing higher labour costs, equipment cost escalations and increased regulatory and development costs for the capital increase.
Since starting development in late 2022, Peabody has invested $75-million in the North Goonyella redevelopment. The project remains on track to begin mining development coal in the first quarter of next year and begin longwall panel development.
“We made substantial progress on strengthening our metallurgical platform as we moved to the next stage of redevelopment at North Goonyella and agreed to acquire an adjacent coal deposit. The addition of this world-class coal deposit in the same seam as North Goonyella leverages our existing infrastructure and equipment,” said CEO Jim Grech.
The acquisition of a large portion of the Wards Well deposit represents an opportunity to extend the mine life of North Goonyella by more than 20 years through an integrated 130-million-ton mine plan.
Peabody earlier this week agreed to acquire a portion of the Wards Well coal deposit from ASX-listed Stanmore for $136-million in cash and a contingency royalty of up to $200-million. Stanmore will retain the Lancewood tenement and the northern part of the Wards Well tenement.
Stanmore CEO Marcelos Matos said in a separate statement that through the transaction, the company continued to realise value from the assets acquired from BHP last year.
“The transaction achieves the monetisation of the Southern part of the Wards Well tenement which would unlikely be mined by Stanmore for many years and would be most logically mined via the existing Peabody North Goonyella workings. Furthermore, substantial high-quality hard coking coal resources will be retained in the Northern parts of the Wards Well tenement with the transaction providing optionality to minimise the start-up capital for the development pathway of Lancewood, before potentially moving underground into Wards Well North thereafter,” he commented.