What we own The Group retained a royalty on the Groundhog anthracite project located in north-west British Columbia, Canada, following its disposal of the related mining licenses in 2014 to the project’s operator, ASX-listed, Atrum Coal NL (‘Atrum’). The royalty entitles the Group to the higher of 1% of gross revenue on a mine gate basis or US$1.00/t from coal sales.
Performance In 2014, Atrum announced the results of a Supplementary PFS for a 5.4Mtpa ROM underground mine. Based on inputs on pricing from Wood Mackenzie, the project generated a post-tax NPV10 (nominal) of approximately A$1.7b, on a capex of US$596m and FOB production cost including royalties of US$86/t.Exploration activities in 2015 focussed on consolidating knowledge of the two key economic targets, Discovery B seam and the lower, Duke E seam. Atrum is currently finalising a new PFS study which includes underground mines in these target horizons, and low cost highwall options.

Atrum announced on February 26, 2015, that it had signed non-binding memorandums of understanding for offtake with Japanese counterparties for anthracite produced from the Groundhog North Mining Complex. In March 2015, Atrum signed a binding equipment finance agreement with China Coal Technology & Engineering Group Corp (‘CCTEG’) for the supply and finance of anthracite mining equipment to facilitate development at the Groundhog North project. Stage one of the equipment finance package is valued at US$100m and includes the supply of mining equipment required to complete the initial small scale mine and subsequent mine wall development for the full scale mine.

Valuation The Groundhog royalty is classified as a royalty intangible asset on the balance sheet. As such, this asset is carried at cost less amortisation and impairments. Royalty intangible assets are amortised when commercial production.