Tuesday, 28 June 2011

Rey Resources in pre-open pending capital raising announcement

Rey Resources (ASX: REY) has been granted a trading halt by the ASX pending a capital raising announcement, with the company's shares placed in pre-open.

Rey has not yet indicated where the new capital injection will be allocated, but the company earlier this week reached a Definitive Feasibility Study milestone at Duchess Paradise.

The study, which commenced in early 2010, proposes a highwall mining operation producing 2.0 to 2.5 million tonnes of 5,500 kcal/kg thermal coal per year to be exported via the company’s existing port infrastructure at Derby in Western Australia.

The study was undertaken by consultants Marshall Miller & Associates Inc. and confirms the prospect of a longer life project and increased economic and employment opportunities for the area.

It proposes an initial operation with a longer mine life of at least 10 years, an ungeared NPV (10% discount rate) of A$176 million (after taxes and MRRT), an internal rate of return of 27%, and a payback of 3.4 years.

Significantly, Rey is now looking to extend the mine life beyond 10 years through further exploration of the company's land holding.

Production costs are estimated at A$70 per tonne.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/17480/rey-resources-in-pre-open-pending-capital-raising-announcement-17480.html

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