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Morien Resources announces Donkin Coal Mine update

Coal News - Published on Thu, 23 May 2019

Image Source: SteelGuru
Morien Resources Corp announced that it has received notice from Kameron Collieries ULC, the owner and operator of the Donkin Coal Mine in Cape Breton, Nova Scotia, that it has been granted approval by the Nova Scotia Department of Labour and Advanced Education for a revised ground control procedure which allows for the continuation of mining and development operations at Donkin.

Kameron announced in early January 2019 that LAE had rescinded its approval of the existing ground control procedure at Donkin due to a fall of ground. No workers were injured nor equipment damaged. Kameron submitted a revised ground control procedure and mine plan to LAE in late January and was subsequently granted approval to recommence mining on a limited scale. Since that time, Kameron has operated on a limited basis at a reduced capacity using the interim ground control plan.

With the re-commencement of normal operations at Donkin, Kameron currently has two fully operating coal sections. These include one section with a recently installed flexible conveyor train, which is a continuous haulage, mobile conveyor belt that replaced the shuttle car fleet in that section. The second coal section is using a traditional shuttle car fleet. Both coal sections are actively developing the Mine’s main underground infrastructure and first production panel.

Morien owns a gross production royalty for the Mine of 2% on the revenue from the first 500,000 tonnes of coal sales per calendar quarter, net of certain coal handling and transportation costs, and 4% on the revenue from any coal sales from quarterly tonnage above 500,000 tonnes, net of certain coal handling and transportation costs. The royalty is payable to Morien on a quarterly basis over the anticipated 30+ year mine life.

Morien’s royalty payments from Kameron increased from USD 4k in Q2 2017, when production at Donkin commenced, to USD 298k in Q4 2018. During Q1 2019, while production was temporarily suspended and while Kameron operated at a reduced capacity, Morien’s Donkin royalty decreased to USD 169k. At full production of 2.75 to 3.0 million saleable tonnes per year (1,2), and using a wide range of coal pricing (CAD USD 60 to USD 120 per tonne), royalty payments to Morien could be in the order of CAD USD 5.0 to USD 9.0 million annually (2).

In January 2019, it was reported that Provincial Energy Ventures Ltd is proceeding with the first phase of its USD 75 million expansion of its export facility in Sydney, Cape Breton. PEV is located approximately 30 kilometres from the Mine and is currently responsible for handling all of the exported coal from Donkin. Once complete, the PEV port will be capable of accommodating larger vessels and is expected to have the capacity to export up to 3.0 million tonnes of Donkin coal annually. A new, dedicated coal haul road that will by-pass certain communities along the current truck route between Donkin and PEV is expected to be complete during the H1 2019.


1) The above technical disclosures are consistent with the information in the technical report titled “Technical Report, Donkin Coal Project, Cape Breton, Nova Scotia, Canada” dated November 2012, found on Morien’s SEDAR profile.

2) These values are only estimates based on assumptions Morien management consider reasonable, as of Q2 2019, and would only be achieved if and when Donkin reaches permitted production levels. Actual results and royalties received, if any, subject primarily to production rates and coal pricing, may vary from those estimated by Morien. Morien incurs general and administrative expenses in respect of the administration and preparation of filing of regulatory filings as a public company, collection of revenues from the aforementioned royalties and seeking and acquiring new mineral projects.

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Posted By : Rabi Wangkhem on Thu, 23 May 2019
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