Cost and Timing Benefits of Infrastructure At Debiensko

4/2017 - 22 lutego 2017

PRAIRIE MINING LIMITED

NEWS RELEASE | 22 February 2017

STUDY CONFIRMS SIGNIFICANT COST AND TIMING BENEFITS OF EXISTING INFRASTRUCTURE AT DEBIENSKO

HIGHLIGHTS:

•Infrastructure Study confirms existing high quality and site connected rail, road, power and water infrastructure at Debiensko is available for immediate use

•The abundance of high quality infrastructure already in place at Debiensko to support an accelerated development timeline with very low capital intensity

•Rail – existing rail siding with on-site link to national rail network provides direct delivery route for Debiensko’s hard coking coal product to Europe’s steel industry

•Roads – public roads connecting the Debiensko mine site to the national highway are suitable for heavy vehicles and allow immediate access for commencement of development activity

•Power – grid connection already at site with executed supply agreement for 30MW to support full scale mine production with an estimated tariff of only USc6.8/kWh (PLN270/MWh)

•Water – mains supply already at site with the local water utility confirming available water supply for full scale operations at Debiensko

•Rail, road, power and water infrastructure requires only minor refurbishment and upgrades to support full scale mine production at Debiensko, with a total estimated cost of only ~US$10m

•Results of the Debiensko Infrastructure Study will be incorporated into the current Scoping Study, which is due to be published in the coming weeks

Prairie Mining Limited („Prairie” or „Company”) continues to progress the Scoping Study at its 100% owned Debiensko Hard Coking Coal Project („Debiensko” or „Project”) in Poland. Work to date confirms that project infrastructure was substantially advanced by the previous owner, demonstrating potential for an accelerated mine development schedule and very low capital intensity.

Based on the results of the Infrastructure Study, it is estimated that it will cost ~US$10m to bring key servicing infrastructure up to full operational capacity for the Debiensko mine redevelopment.

Commenting on the extensive infrastructure already available at Debiensko, Prairie’s Chief Executive Officer Ben Stoikovich stated: „Our Infrastructure Study has confirmed that Debiensko has significant existing high quality and site connected rail, power, road and water infrastructure which can be brought into full operating capacity to service the mine life at minimal cost. This existing and fully permitted critical infrastructure means that we will have substantial savings in capital expenditure costs and avoid lengthy permitting processes and access negotiations typically associated with many other coal development projects. Having only recently acquired the Project, we are rapidly advancing its feasibility and development, with the Scoping Study due to be published in the coming weeks. There are very few emerging premium hard coking coal projects globally with such established infrastructure as Debiensko and in such close proximity to Europe’s ‘blue chip’ steelmakers.”

The Scoping Study is being conducted in accordance with international best practise in all study areas and remains on track to be completed during in the coming weeks.

 

ON-SITE RAIL LINE REQUIRES MINIMAL CAPEX FOR DIRECT ACCESS TO STEELMAKERS

Prior to 2000, when the former Debiensko mine was still in production, the mine was connected to the main Polish rail network. The majority of the mine rail infrastructure is still in place and based on previous specialist studies, minimal capital expenditure would be required for refurbishment. Prairie intends to utilise the existing rail network to transport its premium hard coking coal to regional steel mills and coking plants.

ESTABLISHED ROAD NETWORK PROVIDES IMMEDIATE ACCESS FOR MINE DEVELOPMENT

The Debiensko mine site is connected by public roads to the major road network and importantly, directly connected to Poland’s north-south motorway, Highway A1 which runs from the port of Gdansk on the Baltic Sea through the Upper Silesian Industry Area to the Polish-Czech border where it is connected with the Czech motorway D1. The road network provides immediate access for commencement of development activity at the mine, delivery of equipment and access for the workforce.

LIFE OF MINE POWER SUPPLY ALREADY AVAILABLE

The Debiensko mine site is serviced by an existing high voltage power grid. There is already a 6kV line with 13MW capacity connected to site, with two additional 110kV, 25MW incoming lines available. There is an existing power supply and connection agreement in place for Debiensko with Tauron Dystrybucja GZE S.A. („Tauron”), the local power grid operator. This agreement provides for a maximum of 30MW of power to be supplied to the mine. This supply is sufficient for full scale mine production at Debiensko for the life of the project and it fulfils all Polish statutory requirements requiring both a primary and back-up power supply.

The estimated electricity cost for Debiensko is approximately PLN270/MWh (USc6.8/kWh) based on standard tariffs.

Tauron supplies over 49 TWh of electricity to over 5.4 million customers per year which makes it the largest distributor of electricity in Poland. It is also the second largest electricity generator and supplier in Poland and the largest supplier of heat in Upper Silesia.

WATER SUPPLY AVAILABILITY CONFIRMED

Potable water supply is available at Debiensko via an existing 500mm main water line, with available water supply of 400m3/day officially confirmed by PWiK Czerwionka-Leszczyny, the local water authority. Initial estimates are that the Debiensko mine will require no more than 350m3/day at steady state production for the life of the Project.

TOTAL ESTIMATED COST TO REINSTATE FULL OPERATING CAPACITY

Rail, power, water and road infrastructure requires only minor refurbishment and upgrades to support full scale mine production at Debiensko, with a total estimated cost of ~US$10m.

Table 1: Estimated Costs of Infrastructure

Infrastructure / Utility Estimated Cost

(US$m)

Rail – refurbishment and upgrading of rail siding 3.6

Road – upgrade at site entrance 0.4

Power – installation of substation and switchgear 5.3

Water – enhancing existing water connection 0.1

Total US$9.4

For further information, contact:

Ben Stoikovich

Chief Executive Officer

+44 207 478 3900

Artur Kluczny

Group Executive – Poland

+48 22 351 73 80

Sapan Ghai

Corporate Development

+44 207 478 3900