(EnergyAsia, June 4 2012, Monday) — Australia’s Pan Asia Corp has declared that its flagship thermal coal project Transcoal Minergy Coal (TCM) in Indonesia’s South Kalimantan province is technically and financially feasible.

In a statement, the company said a study carried out by Indonesian mining equipment group PT Kopex Mining Contractors expects the mine to produce 1.5 million tonnes of “saleable” coal a year over a 15-year period.

The mine will be financially viable as its average operating costs have been estimated at US$52 per tonne compared to the average sales price of around $111.46 per tonne, said Pan Asia.

The study expects the mine to deliver a base case net present value of between US$124 million and US$136 million and an internal rate of return of around 20.85%.

Pan Asia, which specialises in pre-development resource projects, said there is further exploration upside at TCM with current infill drilling on the immediately adjacent northern area designed to help refine the mine plan and expected to increase saleable tonnages.

As a result of the study, Pan Asia said it has revised its exploration target upwards to between 200 and 220 million tonnes of 6,500 to 6,800 kilocalorie coal. It has committed to the higher exploration target following an upgrade in the JORC Resource to 128.8 million tonnes last month.

Pan Asia’s CEO, Alan Hopkins, said:

“This is a major milestone for the company with our flagship project receiving such a positive independent review.”

As its next step, Pan Asia said it has secured one of the world’s largest coal miners, Kopex Group, as a partner in the project. It said Kopex has agreed to invest an additional US$1 million above its earlier US$600,000 commitment to cover the costs of an expanded drilling programme.