Indonesian mining contractor PT Debbia Mining has signed a life of mine royalty agreement for all coal sales from Orpheus Energy’s B2 project in East Kalimantan. Orpheus will receive US$8 million per tonne of thermal coal from the 0.95 million tonne indicated project.
Trial mining at the site took place last year and the company undertook a lengthy assessment on how to resume production, determining the most cost efficient strategy would be to appoint a competent mining contractor under a royalty payment agreement.
The terms of the agreement include Orpheus not being responsible for any capital, operating or marketing costs. PT Debbia has begun mobilizing equipment at the site with production expected to commence next month at a monthly rate of 30,000 tonnes.
Orpheus executive chairman Wayne Mitchell says, “We are pleased to enter into this agreement with an experienced mining contractor. The royalty arrangement means the company assumes no financial risk.”
He says the agreement progresses the company’s Indonesian coal strategy of rapidly ramping up production in Kalimantan. “Together with our Kintap ADK project, which is currently producing 50,000 tonnes per month, Orpheus will soon be producing at the rate of 80,000 tonnes per month once B2 resumes mining.”
The current JORC coal resource at B2 will provide an initial three year mine life. Orpheus has planned exploration programs at the adjacent B6 site which has a target of 1.5-2.5 million tonnes, and the nearby B34 project hosts an estimated 10 million tonnes which will keep resources within the area.