President/CEO Braam Jonker spoke to Kevin Michael Grace January 10.
RW: Tell me about your history in the coal industry.
BJ: I started in coal in 1999. I was with Anglo American in corporate finance. I was then CFO of Cambrian Mining, and when we sold Cambrian to Western Coal, I became the CFO. We sold Western Coal [to Walter Energy] in 2010 for just under $3 billion. I have a lot of coal experience, on the transaction side as well as the operations side.
RW: What led to the formation of Canada Coal?
BJ: Bruce Duncan, our Chairman, found out about these Nunavut assets and decided to acquire them. Bruce and I first met in mid-2010. He walked me through the assets, and I liked them a lot. They asked me if I would come on board.
RW: Why Nunavut?
BJ: The sheer size of these assets, and we know we have very good-quality thermal coal up there. The work we’ve done indicates that the coal formation improves in quality as you go deeper. My view is that if we are successful in finding metallurgical coal, it would most likely be a fairly sizable deposit. There will be environmental challenges, and logistics will be difficult, but these are all things that we will need to manage once we know exactly what we have up there. There is only one way of finding out exactly what we’ve got, and so our next step is to drill the most prospective areas we identified during our 2012 program.
RW: You’re now up to 86 licenses covering approximately 2.7 million acres.
BJ: That’s correct.
RW: I work that out to 4,254 square miles. That’s an enormous holding.
BJ: Yeah, it is big. Ellesmere Island has been described as an island of coal. Now, obviously, we won’t be exploring all that area. Some of it we are holding on to for strategic reasons. Our main focus now is the West Fosheim Peninsula.
RW: What did Canada Coal accomplish during 2012?
BJ: What we set out to do was basically derisk the project for everything but the drilling. Despite the historical reports that were to our disposal, there were still a lot of unanswered questions. We thought that shipping the coal would be doable, but we didn’t have confirmation. So we had a logistical study done.
It was a desktop study which indicated that there is sufficient reason to continue. As you pointed out, we have a huge, huge area, and we can’t just go in and drill everything. We had to identify the areas that would be most important to us, and we did that through a mapping and sampling program. We also wanted to confirm the results of the studies done in the 1980s, and so we took more than 200 surface samples and had those analyzed in order to confirm the quality of the coal from the outcrops.