PERTH, Australia — Coalspur Mines Ltd. (TSX: CPT) says it has reached a 14-year agreement for exporting thermal coal from its Alberta project site through the Ridley Terminals Inc. port in Prince Rupert, B.C.
The Australian company says the deal significantly decreases the risk of development at its flagship Vista coal mining project in Alberta, which is estimated to contain 260 millon tonnes of coal reserves.
Initial development costs at the project are expected to be about $580 million.
Financial terms of the deal with Ridley were not disclosed.
The agreement includes the option for an additional 2.5 million tonnes per year for a total of 8.5 million tonnes.
The 14-year term of the deal begins in January 2015 with the option to increase it for seven more years.
Coalspur says the deal also secures port requirements for a majority of the expected production at the open-pit thermal coal project.
The Vista project is beside a CN Rail line that runs to the deepwater port in Prince Rupert, giving the company access to Asian-Pacific countries, where there is growing demand for coal.
Trading of Coalspur’s shares was halted Thursday prior to the announcement. They closed at $2.01, up seven cents, after trading resumed.
“We are exceptionally pleased to have concluded this landmark agreement,” said Gene Wusaty, managing director and CEO at Coalspur.
“It represents a major milestone in the development of Vista as it secures port allocation for the majority of the expected production until 2035. The agreement provides Coalspur committed access to the thermal coal markets in Asia and significantly de-risks the development of Vista as it advances towards the construction phase.”
Ridley Terminals, a federal Crown corporation, is the most northern deepwater port in North America.
“This agreement represents a win-win as it facilitates Coalspur’s strategy to become the largest export thermal coal producer in Canada and positions Ridley Terminals to become a major gateway for Canadian thermal coal to the global markets,” said Bud Smith, chairman of Ridley Terminals.
Coalspur Mines is a coal exploration and development company with over 33,200 hectares of coal exploration leases in the Hinton region of Alberta.
Publication of a feasibility study at its Vista project is scheduled for early next year and construction is expected to follow.