×

Montem Resources (MR1) - $5M Private Placement & Responsible Mining

March 3 2021, 08:11 GMT

Montem Resources

  • TSX: MR1
  • Shares Outstanding: 233.02M
  • Share price AUD$0.17(02.03.2021)
  • Market Cap: AUD$39M

Montem Resources is an Australia-based coal mine development company, with metallurgical coal properties in Canada, known as the Chinook Properties. The Chinook Properties are located in the Crowsnest Pass, south-western Alberta, Canada. The Company is focused on re-establishing mining at the Tent Mountain Mine to produce steelmaking coal. The Chinook Project combines Chinook South and Chinook Vicary.

We caught up with Peter Doyle, MD & CEO of Montem Resources for the first time since we last spoke in the middle of November when he helped us to understand how the coal market works. There is a lot of misunderstanding around met coal, coking coal, steel-making coal versus thermal coal which Peter previously explained.

  

Company Overview 

Montem Resources is a coal mine development company in Alberta, Canada. The company is re-establishing mining at 2 old mines which produce met coal 100% for export.  They're restarting the Tent Mountain mine and expect production in early 2023 and have recently delineated a large project at Chinook which is about 5 years away from production.Montem Resources (MR1) - $5M Private Placement & Responsible Mining

The Alberta Government Reinstating the 1976 Coal Policy: Implications & Reasoning

It is an interesting time for the coal industry in Alberta.  The 1976 coal policy is an overarching document that was implemented in 1976 to categorise the different areas of land and their use with respect to coal mining into 4 categories.

Category 1 - no mining.

Category 2 - predominantly designed for only underground mining.

Category 3 - open-pit mining on the prairies.

Category 4 - open-pit mining on the eastern slopes of the Rockies.  

Montem Resources' assets are predominantly in Category 4 and have an area around them where open-cut mining was permitted and it continues to stay that way. There will be a Government consultation which will take some time but for now as Category 4 assets, the Montem assets are largely immune from any challenge.

The current Government rescinded the policy in June last year on the basis that it was superseded by much more modern legislation and regulation around land use.  Alberta is divided into areas and there are regional land use plans within those areas. There is also a Federal and Provincial regulatory system that controls and regulates all mining and any new coal mining in Canada needs both Federal and Provincial approval.  These various layers of regulation about land use have superseded the policy with more modern and rigorous regulatory systems to align with new science.  A mining company needs to study the land and the effects of the mining and then put forward an Environmental Impact Assessment based on those studies which is assessed by the Federal and Provincial regulatory bodies.Montem Resources (MR1) - $5M Private Placement & Responsible Mining

Matters of Jurisdiction: Politics & Mining

Western domains can be a good jurisdiction in which to have mining assets but there are a lot of rules and regulations to comply with. Mining is a contentious issue for a combination of reasons and coal mining is a hot topic as some people believe passionately coal mines will destroy eco-systems, and that miners are irresponsible and will not remediate mining sites once the mining operation has ended.  Montem Resources says it fully intend to be a responsible miner, to abide by the rules and regulations and laws.  One of the ways to ensure this is through financial bonding. At the front end of a coal mine, the company has to provide a significant cash bond which is held by the Government who hold the cash bond for the life of the mine until the rehabilitations are completed.  

Another concern for local is selenium, which is a heavy metal in the rock around the coal.  As water flows through the rock it dissolves the solid selenium into a liquid which goes into the water and can adversely affect the wildlife and environment. A Montem mine plan will encompass a water management system that mitigates selenium leach acid leaving the site. Montem Resources (MR1) - $5M Private Placement & Responsible Mining

Solving Negative Sentiments for Mining & Environmental Concerns 

Leaching selenium into the environment has been happening from mining operations for years without much knowledge of selenium and how it could affect the environment. There has been a lot of work over the last 15 years to work out how to mitigate that with great success.  Saturated rockfills is a method of stopping the selenium which will be used to try and clean up the legacy of previous mining in the region.

It is understandable that people have concerns about mining and the environment. The Rockies are a beautiful part of the world with wonderful eco-systems so mining companies need to be able to manage operations to minimise environmental impact in a sustainable and respectful way which First Nations people and ranchers can accept. Developing the mines, mining through these deposits and then remediating the sites appropriately is the modern, acceptable mining method adopted by Montem Resources. The remediation of the mine starts about 1 year after mining begins.

The metallurgical coal from this area is incredibly valuable for the local economy, and if Grassy Mountain, Tent Mountain and Chinook were to go ahead, the company will be spending around about AUD$1Bn-AUD$1.5Bn a year in the local economy with significant corporate, local and provincial taxes as well as royalties based on revenue. Plus the creation of several hundred jobs which will last 20-30 years will be created too.

Scoping Study Progress at Chinook: Timing for Results

Montem Resources has been working on historical information on Chinook. There is 150Mt of coking coal resources there, with potential for a lot more. They are planning further exploration to bring the underlying resource status up and have raised just over AUD$5M from existing shareholders and new institutions for the exploration this summer to go towards the scoping study.   

The company started the year with AUD$3M in the bank, and having raised just over AUD$5M, that will cover this drilling season and the results will be out at the end of this year. Montem Resources is keen to attract a strategic partner to become a joint-venture partner at the Tent Mountain mine which will provide guaranteed offtake.  

Producing by 2023, What Could Delay it? 

Tent Mountain is aimed for production in 2023 but the company needs to finalise permitting and financing for the project. They are currently advertising the Terms of Reference for their EIA, which they expect to put out in July and hope to get permitted by the middle of next year. Post-permitting, it will take a few months to order equipment, get it on site, build the prep-plant, build the rail-siding and production starts thereafter. 

We’re looking forward to seeing what happens over the next few months so we hope to stay in touch and follow the Montem Resources story going forward. 

To find out more, go to Montem Resources' Website. 


Club Waitlist CTA
Share this article
cruxLogo

Any advice contained in this website is general advice only and has been prepared without considering your objectives, financial situations or needs. You should not rely on any advice and / or information contained in this website or via any digital Crux communications. Before making any investment decision we recommend that you consider whether it is appropriate for your situation and seek appropriate financial, taxation and legal advice.

Crux Investor does not verify information provided by contributors or video interviewees on this site, and makes no assurance as to the adequacy, completeness or accuracy of any such information. Crux Investor steadfastly disclaims any liability or responsibility for the outcome of any investments made by users of this site or our branded affiliates. Users of this site (and our branded affiliates) should consult with their own financial advisors to assist them in making investment decisions. By accessing this site and our branded affiliates, you agree to the terms of service and privacy policy.