Morien Resources Receives Notice to Resume Mining and Development Operations at Donkin Coal Mine

Morien Resources Corp., a Canada based, dividend-paying, mining development company, has announced that it has received an approval notice from Kameron Collieries ULC, the operator and owner of the Donkin Coal Mine in Cape Breton, Nova Scotia.

Under the notice, Morien Resources Corp. has been granted approval by the Nova Scotia Department of Labour and Advanced Education for a revised ground control procedure that enables the continuation of development and mining operations at the Donkin Coal Mine.

In early January 2019, Kameron Collieries ULC reported that the Department of Labour and Advanced Education had canceled its approval of the prevalent ground control procedure at Donkin Coal Mine as a result of a ground fall. None of the workers were injured and the equipment was also not damaged. Then, in late January, the Department of Labour and Advanced Education received a revised mine plan and ground control procedure from Kameron Collieries ULC, which was later granted approval to resume mining on a restricted level. Ever since that period, Kameron Collieries ULC has operated on a restricted basis at a minimum capacity utilizing the interim ground control plan.

With the re-initiation of regular operations at the Donkin Coal Mine, Kameron Collieries ULC presently has a couple of two completely operating coal sections. One coal section is utilizing a conventional shuttle car fleet, while the other coal section contains a newly deployed flexible conveyor train, which is a nonstop haulage, mobile conveyor belt that substituted the shuttle car fleet in that specific section. The two coal sections are actively developing the first production panel and main underground infrastructure of the Donkin Coal Mine.

With regards to the Donkin Coal Mine, Morien Resources owns a gross production royalty of 2% on the revenue from the initial 500,000 tons of coal sales for every calendar quarter, net of specific coal handling and transportation expenses, and a gross production royalty of 4% on the revenue generated from any coal sales from quarterly tonnage beyond 500,000 tons, net of specific coal handling and transportation expenses. Morien Resources will receive royalty payments on a quarterly basis over the expected mine life of more than 30 years.

Morien Resources’ royalty payments from Kameron Collieries ULC increased from $4k in the second quarter of 2017, when production was initiated at the Donkin Coal Mine, to $298k in the fourth quarter of 2018. During the first quarter of 2019, Morien Resources’ Donkin royalty payments decreased to $169k while production was momentarily suspended and while Kameron Collieries ULC operated at minimum capacity. At full production of 2.75 to 3.0 million saleable tons annually and utilizing a broad range of coal pricing (CAD $60 to $120 for each ton), Donkin royalty payments to Morien Resources may be in the order of CAD $5.0 to $9.0 million per year.

It was reported in January 2019 that Provincial Energy Ventures Ltd. (PEV) is continuing with the initial phase of its $75 million expansion of its Sydney, Cape Breton-based export facility. Located about 30 km from the Donkin Coal Mine, PEV is now accountable for handling the entire exported coal from the Donkin Coal Mine. As soon as this is completed, the PEV port will be able to accommodate bigger vessels and is anticipated to have the capacity to export around 3.0 million tons of Donkin coal per year.

It is expected that a new, specialized coal haul road that will by-pass specific communities along the present truck route between PEV and the Donkin Coal Mine will be completed during the first half of 2019.

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