B.C. junior gets OK to mine coal sample

First Coal Corp. Sept. 2 said British Columbia's Chief Inspector of Mines has approved an application to amend the Vancouver-based junior's exploration permit and extract a bulk sample of up to 50,000 metric tons of coal from its Central South property near Chetwynd in northeastern British Columbia.

First Coal has more than 90,000 hectares, or 357 square miles, under tenure license or under application for license in the Peace River Coalfield near Chetwynd, which has a historic resource estimate of 1.6 billion metric tons of metallurgical coal deposits, primarily used in steel-making.

First Coal is exploring two coal properties, Central South and South Cirque, in the area.

The properties are centrally divided by Highway 97, an all-weather regional highway, and by CN Rail's line, which connects the region to the export coal terminal of Ridley Island near Prince Rupert, B.C.

Environmental challenges

The Central South property has complex geology characterized by narrow, steeply dipping coal seams from 1 to 3 meters wide with no known faulting. Seams dipping at 45 degrees and higher with thicknesses greater than 1 meter are considered to be mineable.

But a potentially greater challenge may be mitigating the proposed mine's potential impact on the Burnt Pine Caribou Herd, a small group of animals currently listed as "threatened" under Canada's Species At Risk Act.

The mineable area in the Central South property is about 2 kilometers wide and 10 kilometers long.

Based on geological and engineering studies and depending on the average annual rate of production, First Coal believes the property has enough coal to support a 245,000-metric-ton-per-year mine for at least 20 years.

An NI 43-101-compliant report completed in May estimated that an 8.5-square-kilometer area contained 81 million metric tons of measured, indicated, inferred and speculative in-situ coal resources - 15.5 million, 27.9 million, 35.4 million, and 2.2 million metric tons, respectively.

"Receipt of the Bulk Sample Amendment represents a real milestone for our company as we continue to put our plans into operation," First Coal President and CEO Douglas Smith said in a statement. "We are committed to developing coal resources in British Columbia, encouraging economic development and becoming an active member of the business community in the Chetwynd region."

Economic benefits

The green light for the bulk sample bodes well for the northeastern region of British Columbia in light of the current economic downturn because it will enable First Coal to develop coal resources and create much-needed new jobs.

The company said the project would create up to 200-400 construction jobs and 100-150 production jobs during the life of the mine along with indirect local economic benefit from an annual payroll of $10 million - $15 million initially, and $60 million - $80 million as the project advances into production.

Aboriginal concerns

Central South and South Cirque fall within the Treaty 8 territory, the traditional aboriginal lands of eight bands. First Coal has been involved in a public consultation process with four of the First Nations within Treaty 8 and has committed to provide employment and business opportunities to area First Nations and local companies while also ensuring safeguards to protect the environment and the local caribou population.

At least one of the First Nations bands has objected strenuously to the mine project, fearing its potentially detrimental impact on the local caribou herd.

During the past year, First Coal has developed an extensive reclamation and remediation plan for areas disturbed to date. The company said reclamation in some of these areas will be completed this year with assistance from some First Nations members and its plan will be modified as development proceeds to ensure protection of the environment, enhancement of wildlife habitat where feasible and reclamation of areas that are no longer required for exploration or operational purposes.

2010 production target

First Coal plans to begin extraction of the bulk sample in the fourth quarter, subject to receipt of ancillary permits.

The company also said it intends to submit an application for a Small Mine Permit to the B.C. government. The permit will allow production to begin in the last quarter of 2010 at an annualized rate of 245,000 metric tons of clean coal.

Extensive environmental and planning work has been underway for the past four years to ensure that adequate information is available for First Coal to achieve this objective, the company said.

First Coal will be the first producer in the world to mine steeply dipping coal seams using the ADDCAR Any Dip Highwall Mining System. Besides lower costs, the system offers the advantage of increased safety, in that no workers are required to go underground, and significantly reduced environmental footprint and substantially greater recovery rates compared to conventional mining methods, the company said.

Mining of the bulk sample will test the system in actual mining conditions and make coal available for testing and assessment by potential customers. The coal will subsequently be shipped to prospective purchasers as representing the typical quality of coals that First Coal could produce.