On September 13, 2022, Kameron received regulatory approval to reopen the Donkin Mine from the Nova Scotia provincial government. Production has resumed. The Mine had been on care and maintenance since March 2020.
On March 30, 2020, Kameron announced that it was ceasing production operations at the Donkin Mine due to adverse geologic conditions. The Mine was not sealed and no mining equipment was removed from the site. During this time, the Mine was maintained by a small staff to ventilate and keep the facility dewatered during an idled phase of care and maintenance.
Kameron is in the Development Phase of the operation where two coal sections are actively developing the Mine’s main underground infrastructure to allow for the long-term and highly active Production Phase, which is expected to incorporate retreat mining. For the retreat mining phase, Kameron may evaluate the viability of installing a longwall mining system which would reduce its operating costs and increase production volumes.
The Donkin Mine is currently permitted for run-of-mine annual production of 3.6 million tonnes, which would produce approximately 3.0 million saleable tonnes after being washed in the onsite coal handling and preparation plant.
At 3.0 million saleable tonnes and using a wide range of coal pricing (C$100 to $300 per tonne), royalty payments to Morien could be in the order of C$7 to $23 million annually. These values are only estimates and are based on assumptions that Morien management consider reasonable and would only be achieved if Donkin resumed operation and only if Donkin reached permitted production levels. Future 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 regulatory filings as a public company, collection of revenues from the aforementioned royalties, and seeking and acquiring new mineral projects.
* 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.
Morien owns a gross production royalty on coal sales from the Donkin Mine. The royalty consists of 2.0% of the revenue from the first 500,000 tonnes of coal sales per calendar quarter, net of certain coal handling and transportation costs, and 4.0% of the revenue from 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. The royalty is binding on Kameron and its successors in interest in the Mine for the duration of the Mine’s lease.