Poland-focused coal player Prairie Mining (LSE:PDZ) sat flat at 21p on Monday after updating investors on its potential tie-up with JSW and various legal disputes.
In a Q1 update, the business reminded investors that – alongside JSW – it has signed an extension to the non-disclosure agreement protecting both firms as they discuss the structure and terms of any co-operation deal. Although this is now in place until the end of September, Prairie said that JSW has reported that it would like to agree on the basic terms of a potential transaction by the end of April.
The possible link-up was first announced last March and saw Prairie give JSW access to information on its hard coking coal project under the Debiensko-1 concession and its Jan Karski project in the Lublin Coal Basin. JSW has since been conducting an assessment of the feasibility and economics offered by both projects.
This has now completed and has confirmed that Jan Karski’s Lublin deposit contains semi-soft coking coal that it can potentially utilise. JSW’s work has also shown the technical feasibility and potential synergies of accessing initial seams at the Dębieńsko deposit. This would employ existing infrastructure at JSW's adjacent Knurów-Szczygłowice mine and potentially enable the production of hard coking coal within 18 months of permits being granted.
Jan Karski is a large scale semi-soft coking coal project located in the Lublin Coal Basin in south-east Poland. It is situated adjacent to the Bogdanka coal mine, which has been in commercial production since 1982 and is the lowest cost hard coal producer in Europe. According to Prairie, Jan Karski has the potential to produce a high-value ultra-low ash semi-soft coking coal with a coking coal product split of up to 75pc. Meanwhile, the Debiensko nine is a hard-coking coal project located in the Upper Silesian Coal Basin in the south west of Poland.
Elsewhere in Friday’s update, Prairie said it will defend its 50-year mining concession at Debiensko strongly. It added that it will continue to take all relevant actions to pursue its legal rights regarding the Debiensko concession amendment. This includes filing an appeal with Poland's Administrative Court.
The company’s efforts here come after Poland’s Ministry of Environment denied its request to extend the time stipulated in the Debiensko mining concession for the first production of coal from 2018 to 2025. Prairie believes the body’s decision is ‘fundamentally flawed’ and does not comply with Polish, EU and international law.
‘It demonstrates yet further evidence of the discriminatory treatment faced by Prairie as a foreign investor in Poland,’ the firm added on Friday.
On a more positive note, the firm said it remains in a financially stable position, with cash reserves of $8m on hand. However, it added that it formally initiated a legal dispute with Poland’s government in February. In Prairie’s words, this has arisen out of ‘certain measures’ taken by Poland in breach of the Energy Charter Treaty, the UK-Poland Bilateral Investment Treaty and the Australia-Poland Bilateral Investment Treaty.
Author: Daniel Flynn
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