11th Aug 2015 12:29
LONDON (Alliance News) - Oracle Coalfields PLC shares leapt on Tuesday after it said it has submitted its coal price petition to the relevant authorities in Pakistan, which will now decide what price the company can charge for its coal.
Oracle shares were up 22.3% to 1.62 pence per share on Tuesday afternoon.
In Pakistan, coal prices are based on a cost-plus arrangement, meaning company's charge a price dependent on its costs. Oracle has submitted the petition based on its costs defined in the mine feasibility study for its mineral resource and mine mouth power plant located in the Thar desert in the south-east of Sindh Province.
The petition has been submitted to the Sindh government and the Thar Coal and Energy Board.
The Energy Board will now determine the feasibility stage coal price, which once defined will allow Oracle to apply for an initial electricity tariff for the power plant. Oracle has asked for a price of USD76.48 per tonne of coal.
"The admission of our coal price by the Thar Coal and Energy Board, government of Sindh, is an important milestone for the company and represents the latest step towards our goal of developing a producing mine capable of supplying indigenous coal," said the company.
The coal price will be re-determined in the future once the price for the engineering, procurement and construction contract for the project has been finalised, and then the coal price will be updated periodically through the lifetime of the project, said Oracle.
Under the mine feasibility study, the coal price will be determined based on the financial figures of that report.
The feasibility study states the company can build a project that can produce a 4.0 million tonne per year operation for around USD879 million, of which USD615 million will be financed through debt and the other USD264 million in equity.
The financing part of the capital cost is being provided by Sinosure, the Chinese Export Credit Corp and other financial institutions, which is still being discussed.
Based on these figures, Oracle is asking the Energy Board for a coal price of USD76.48 per tonne, averaged over the thirty year life of the project.
Away from the coal price, Oracle said the project is progressing and the company is currently selecting a mining sub-contractor, which will be followed by the signing of engineering, procurement and construction contract with Shangdong Electric Power Corp of China, for both the mine and the adjacent power plant.
By Joshua Warner; [email protected]; @JoshAlliance
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