Cardero’s share of Carbon Creek at $752M NPV

Vancouver – Cardero Resource (CDU-T) has released a preliminary economic assessment on its 75%-owned Carbon Creek metallurgical coal project in Northeast British Columbia only months after securing majority ownership of the project.

The PEA outlines a surface and underground mine producing 2.9-million tonnes of cleaned coal per year, while total minable tonnes came in at 115 million tonnes underground and 21.8 million tonnes of surface-minable coal.

With a long-term base case assumption of US$185 per tonne, the finances work out to an after-tax net present value of US$752 million with an 8% discount and an internal rate of return of 29.3%, both on a 75% basis. The study estimates capital costs of $301 million, plus sustaining capital of $203 million.

“We are very pleased with the results of the Norwest report,” stated Cardero’s president and chief executive officer Michael Hunter. “Our 75-per-cent interest in the Carbon Creek joint venture has led to a NPV more than six times the size of our current market capitalization.”

Hunter came on as president of Cardero in June, and was appointed CEO in November. Hunter founded First Coal, which was purchased by Xstrata (XTA-L) for $137-million in July, and was head of Coalhunter Mining before Cardero took it over earlier this year.

Cardero’s takeover of Coalhunter in June was how it secured its 75% interest in the Carbon Creek project. Cardero had already held 45.5% of Coalhunter’s shares, and took over the rest by issued 0.8 of a Cardero share for each Coalhunter share. The remaining 25% of the project is controlled by P. Burns Resources of Calgary, which has a carried interest.

A June resource estimate on the project outlined 114 million tonnes of measured and indicated resource as well as 89.1 million inferred tonnes, but the recent PEA included a more detailed resource estimate that splits surface and underground resources as well as added significantly to the overall resource. Surface resources include 53.2 million measured and indicated resources and 19.6 million inferred resources, while underground resources include 113.5 million measured and indicated tonnes and 147.5 million inferred tonnes.

According to a technical report, the coal at Carbon Creek is medium volatile bituminous coals of the Gething Formation, which consists of mudstone, siltstone, sandstone, coaly plant debris, black shale, occasional minor tuffs and abundant but relatively thin coal seams. Over thirty coals seams occur in the middle and upper parts of the formation.

At the end of November Cardero closed a $7.6-million non-brokered private placement, issuing 8 million units at 95¢ each. The company currently has 91 million shares outstanding.

Also in November, the company entered into a letter of intent with Anglo Pacific Group to acquire full ownership of Trefi Coal, which controls the Trefi metallurgical coal deposit in the Peace River coalfield of northeast B.C.

Cardero’s share price ended unchanged at $1.13 on the news with 361,000 shares traded. The company hit a 52-week high of $2.35 in January and a low of 75¢ in early October.