After acquisition of the coal assets in November 2005, Altona shifted its strategic focus away from simply mining – the basis of past evaluations - to the high value added business model of an integrated mine and Coal to Liquid (CTL) plant with a co-generation power facility. Initial scoping studies confirmed the company’s perception that existing technology, underpinned by the quantity and quality of the coal resources, would enable a world scale CTL and Power project to supply available fuel and power markets.
During 2006, the Company reviewed all the available historical data on Wintinna and commissioned several preliminary studies covering CTL and Power Plant technology and design options, the updating of mine cost parameters, plus electricity and fuels market studies. After evaluating the results of these preliminary studies, Altona commissioned Hatch Engineering (pursuant to its role as due diligence consultant to the Royal Bank of Scotland (“RBS”), Altona’s Project Finance Advisor at the time) to conduct a “Gap Analysis”. This study evaluated the status of available information and advised Altona as to the further work required to complete project evaluation to Pre Feasibility Study (PFS) level and to establish a firm basis for commencing a Bankable Feasibility Study (BFS). Hatch’s report was issued to Altona in April 2007 and the Company subsequently acted on its principal recommendations in completing the PFS.
A field drilling program, commenced in May 2007 was completed in February 2008, with the associated geotechnical, hydro-geological, coal testing and analysis and Resources Statements completed later in the year. During 2007, the Company also commissioned pre-feasibility work on CTL and Power Plant options (at a pre feasibility cost assessment level of +/- 30%), further optimisation work on mine costs and, with the assistance of RBS, constructed a Project Economic Model using the inputs from these studies. Further studies on fuel and electricity markets were also undertaken. These studies, together with the historical data base and the field drilling and associated technical programs, were brought together in a Report of the Prefeasibility Studies for the Arckaringa Project. The Report was concluded in August 2008. The conclusions and quality of the work performed was sufficient, in the Company’s opinion, to justify moving to a Bankable Feasibility Study.
Throughout the PFS stage, Altona was concerned to ensure that the Project work could withstand scrutiny from the resources and investment community and that it would remove risk and increase value as the Project proceeds. The company, as a deliberate part of its Business Plan, appointed world class advisers and consultants to undertake the pre-feasibility studies and field programs. These advisers acted under the directions of, and reported to, the Managing Director. All of the companies listed below are experts in their fields with a track record of work with major mining and resource projects.