Peabody said it is making strategic investments in its existing seaborne metallurgical portfolio to substantially increase expected coal production and mine life. During Q3 2023, the company made substantial progress on strengthening its metallurgical platform as it moved to the next stage of redevelopment at the North Goonyella mine in Australia 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 Jim Grech, president and CEO, Peabody. “The acquired resources will support a North Goonyella mine life of 25 years or more, making it a premier, tier one premium hard coking coal mine.”
North Goonyella recently completed a key project milestone of Zone B re-entry. The company said the project remains on track to commence mining of development coal in Q1 2024 and begin longwall panel development.
The board approved the funds to complete development at North Goonyella with longwall production expected in 2026. Total capital expense for the project has increased $109 million to $489 million, due to higher labor costs, equipment cost escalations, and increased regulatory and development costs.
Since commencing development in late 2022, Peabody has invested more than $75 million in North Goonyella. The company expects the project to generate returns in excess of 21% from the initial 20 million metric tons (mt) of longwall production as long as premium hard coking coal prices remain around $180/mt.
On October 25, 2023, the company reached an agreement to acquire a large portion of the Wards Well coal deposit adjacent to North Goonyella for $136 million and a contingent royalty of up to $200 million payable after recovery of the full project investment and coal prices exceeding certain targets. The company said acquisition represents a strategic opportunity to extend the life of North Goonyella by more than 20 years through an integrated 130-million-mt mine plan.
Development production continues at the Shoal Creek mine in Alabama, USA, and is ahead of target with favorable geological conditions in the L panel area. The company said all significant longwall equipment is now at the site and the shields are being positioned on the face. First longwall production is anticipated early in Q1 2024.
Peabody is also replacing the existing longwall kit at the Metropolitan mine (excluding shields) in Australia. The company said the new equipment will be in place when the mine moves to the next longwall panel commencing in Q1 2024.