It was a solid turn out for the second Telkwa Coal open house Nov. 28 at Telkwa Elementary School. Founder Mark Gray said there will be five total.                                Chris Gareau photo

It was a solid turn out for the second Telkwa Coal open house Nov. 28 at Telkwa Elementary School. Founder Mark Gray said there will be five total. Chris Gareau photo

Japanese company signs Telkwa Coal deal

How the proposed 750,000 tones of coal for making steel will be sold.

Telkwa Coal held its second public open house at Telkwa Elementary Nov. 28.

About 50 consultants have been hired by Telkwa Coal, with about eight in Telkwa to explain the storyboards set up in the school gym.

The usual questions and concerns were brought up: water quality, dust, noise. But now that the project 100 per cent owned by Allegiance Coal is into the environmental assessment phase, answers are getting more specific.

As reported by The Interior News, the Tenas metallurgical coal project south of Telkwa is now planned to be above the threshold for an environmental review under Section 10 of the Environmental Assessment (EA) Act.

The company has applied to build a road through Crown land to its planned rail loop to load onto trains cars along the CN track to Prince Rupert. That was an answer for some concerned about the dust and noise.

Another answer for visitors that founder and Allegiance Coal managing director Mark Gray could now answer is how is the proposed 750,000 tones of coal for making steel going to be sold.

In November, a two-stage investment agreement was made with Japanese company Itochu.

Gray said it took 18 months to get the deal done. He added the company is putting money into the project and will help make sales to steel companies.

“In a word, very significant. It’s very significant to secure the investment support of a Japanese company,” said Gray.

He said they were in discussions with other Japanese trading houses, but felt good with this deal.

Itochu has agreed to invest $6.6 million Canadian into the Telkwa Met Coal Joint Venture by way of a subscription for shares in Telkwa Coal Limited up to an initial 20 percent of the shares in Telkwa Coal.

This is stage one investment, and on the basis of TCL’s current operating budget, and TCL’s current cash at bank of C$1.5M. Stage one investment equates to 6.8 cents per Allegiance share, a premium of 36 per cent to Allegiance’s share price of 5 cents, according to a Nov. 5 Allegiance announcement.

“That money funds us all the way to completion of permitting,” said Gray.

“And then stage two investment is they’ll come in after we’re permitted, assuming we are, and then they’ll provide equity funding for the construction finance.”

Itochu has the right to subscribe for additional shares in Telkwa Coal up to a maximum of 50 per cent of Telkwa Coal’s share capital.

Gray said the company is required to host two open houses for the environmental assessment, but there are too be a total of five open houses with the next one planned for spring.

The first working group with the Environmental Assessment Office was planned for Tuesday after print. Gray expects the process to take about nine months.

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