New Elk
Allegiance completed the acquisition of the New Elk Mine (Mine) in October 2020 and returned the Mine to production in June 2021. Allegiance plans to gradually increase production at the Mine to around 2.5 million tonnes per annum by 2024. The coal is sold globally to steel mills on the seaborne market exporting from either the Gulf of Mexico or Northern Mexico depending on the market. The Mine is located in Las Animas County in southeast Colorado bordering northeast New Mexico, and sits within the Raton Basin which according to U.S Geological Survey Paper 1625-A, has an estimated 15 billion metric tonnes of coal. 
The Mine comprises around 656Mt of hard coking coal, is permitted for production, is fully constructed, and is located 850 miles by rail to the Bay of Houston, and the Pasadena Deep Water Coal Terminal in the Gulf of Mexico, and from there, has shipping access to Europe, South America, and also Asia where the Asian steel mills do send large vessels around the Cape of Good Hope for US coking coal.
Allegiance also owns the Lorencito Property which neighbours the Mine, and which comprises another 88Mt of hard coking coal.
Combined, the New Elk Mine and the Lorencito Property comprise 744Mt of coal resources of which 45.1Mt have been converted from just three of nine coal seams representing just 31% of total coal resources, into coal reserves.
In its 15 July 2019 ASX announcement, Allegiance listed the New Elk Mine coal resources previously prepared in accordance with National Instrument 43-101 ‘Standards of Disclosure for Mineral Projects’ (Report). The Report declared a mineral resource estimate of 656Mt of coal resources at a minimum seam height of three foot. That mineral resource estimate is shared across 8 coal seams summarised in the table below.
| Coal seams |
Seam height |
Measured Mt |
Indicated Mt |
Inferred Mt |
Total Mt |
| Green |
3 to 7 foot |
29.94 |
24.95 |
0.09 |
53.98 |
| Loco |
3 to 4 foot |
13.06 |
27.22 |
24.13 |
64.41 |
| Blue |
3 to 5 foot |
47.36 |
34.56 |
0.82 |
82.74 |
| BCU |
3 to 6 foot |
11.61 |
33.38 |
27.22 |
72.21 |
| Red |
3 to 4 foot |
21.14 |
9.34 |
0.00 |
30.48 |
| Maxwell |
3 to 9 foot |
65.41 |
65.05 |
15.79 |
146.24 |
| Apache |
3 to 5 foot |
45.63 |
51.53 |
13.97 |
111.13 |
| Allen |
3 to 5 foot |
38.83 |
43.45 |
12.79 |
95.07 |
| Total |
|
271.97 |
289.48 |
94.80 |
656.26 |
In its 28 November 2019 ASX announcement, Allegiance delivered the results of a feasibility study of the New Elk Mine, including a statement of resources and reserves in accordance with the JORC Code and NI 43-101 in relation to the Green, Blue and Allen seams only, summarised in the two tables that follow.
| Resources |
Seam height |
Measured Mt |
Indicated Mt |
Inferred Mt |
Total Mt |
| Green seam |
3.0 foot |
19.1 |
17.7 |
5.6 |
42.4 |
| Blue seam |
3.0 foot |
89.6 |
31.4 |
9.1 |
130.2 |
| Allen seam |
3.0 foot |
68.9 |
25.4 |
0.7 |
95.1 |
| Total |
3.0 foot |
177.6 |
74.4 |
15.6 |
267.6 |
| Reserves |
Seam height |
|
Proven Mt |
Probable Mt |
Saleable Mt |
| Green seam |
4.0 foot |
|
0.8 |
- |
0.8 |
| Blue seam |
4.0 foot |
|
17.7 |
4.5 |
22.2 |
| Allen seam |
4.0 foot |
|
16.7 |
5.5 |
22.1 |
| Total |
4.0 foot |
|
35.2 |
9.9 |
45.1 |
In relation to the Lorencito Property, the calculated in-place coal resources for the Primero seam is 87.6Mt, summarised in the table below by reference to coal seam thickness. As is evident, the vast majority of the in-place coal exceeds 4 foot thickness.
| In place coal seam thickness (feet) |
Demonstrated in place coal resources (metric tonnes) |
| 3.0 to 4.0 |
24.5 |
| 4.0 to 5.0 |
33.8 |
| 5.0 to 6.0 |
23.0 |
| 6.0 + |
6.3 |
| Total |
87.6 |
The New Elk and Lorencito Property coals are high volatile US hard coking coals ranging from high vol A to high vol B. Both are suitable for steel production and sought after by the steel mills primarily for their fluidity
The property that sets coking coals apart from other coals is its caking ability. Coke is produced by heating a blend of coking coals in a coke oven in a reducing atmosphere. As the temperature of the coal increases, it becomes plastic, fusing together before resolidifying into coke particles. This is known as the caking process.
The quality of the resultant coke is determined by coke plant operating conditions and the qualities of the coking coals used in the blend. Coal fluidity is one such important quality and US high volatile hard coking coals typically have exceptional fluidity compared to low and mid volatile hard coking coals.
The table below highlights key differences between Australian, Canadian and US hard coking coals by reference to coke strength after reaction and fluidity. Australian low-vol and Canadian mid-vol hard coking coals deliver higher coke strength to the coke oven while US high-vol coking coals deliver higher fluidity.
| |
Volatile Matter |
CSR* |
Fluidity (ddpm)** |
| Australia Hard Coking Coals |
|
|
|
| Premium low-vol |
21 |
71 |
500 |
| HCC 64 mid-vol |
21 |
62 |
100 |
| Canadian Hard Coking Coals |
|
|
|
| Mid-vol |
25 |
70 |
100 |
| US Hard Coking Coals |
|
|
|
| Low-vol |
19 |
58 |
|
| High-vol A |
32 |
>50 |
30,000 |
| High-vol B |
34 |
>45 |
25,000 |
* coke strength after reaction ** dial divisions per minute
New Elk Coal Quality
The Allen seam quality parameters compare favourably with high vol A and B hard coking coal while the Blue seam aligns with high vol B hard coking coal.
| New Elk Coal Quality |
Units |
Typical HVB |
Blue Seam |
Allen Seam |
|
Proximate
|
Ash |
% |
<9 |
9.0 |
9.0 |
| Volatile matter |
% |
34 – 37 |
35.4 |
36.4 |
| Sulphur |
% |
0.75 - 1.3 |
0.60 |
0.60 |
|
Rheology
|
Free swell index |
|
7 - 9 |
6 - 7 |
7 – 9 |
| Maximum fluidity |
ddpm |
20k - 30k |
25k |
30k+ |
| Dilatation |
% |
70 - 220 |
140 |
220 |
|
Ash chemistry
|
Phosphorus |
% |
0.004 - 0.009 |
0.09 |
0.06 |
| Base acid ratio |
% |
0.14 - 0.17 |
0.28 |
0.24 |
| CSR (calculated) |
|
45 - 54 |
44 |
49 |
|
Petrography
|
RoMax |
|
0.90 - 1.0 |
0.87 |
0.87 |
| Strength index |
|
3 - 3.5 |
3.06 |
3.19 |
Lorencito Coal Qaulity
The Primero coal seam located in the Lorencito Property is a premium product with coal specifications that align with US high-vol A hard coking coal.
| Selected coking coal quality parameters (adb) |
Units |
Typical HV A |
Primero Seam |
| Proximate |
Ash |
% |
6 – 8 |
8 – 9 |
| Volatile matter |
% |
31 – 34 |
30 – 34 |
| Sulphur |
% |
0.75 – 1.05 |
0.55 – 0.66 |
| Rheology |
Free swell index |
|
7 – 9 |
7 – 9 |
| Maximum fluidity |
ddpm |
30,000 |
25,000 – 30,000 |
| Dilatation |
% |
220 – 350 |
270 |
|
Ash chemistry
|
Phosphorus |
% |
0.004 – 0.009 |
0.03 |
| Base acid ratio |
% |
0.14 – 0.17 |
0.21 |
|
Petrography
|
RoMax |
% |
0.90 – 1.0 |
0.92 – 0.99 |
| Strength index |
|
>3.5 |
>3.5 |
| Stability factor |
|
>50 |
45 – 50 |
| Vitrinite |
% |
60 – 70 |
75 – 85 |
| Coke strength |
CSR |
|
>50 |
50 – 54 |
| Ash fusion |
Temperature |
OF |
2,550 – 2,680 |
2,470 – 2,580 |
