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(Alliance News) - GCM Resources PLC shares jumped on Monday after it said it signed a deal covering mine development works worth around USD1 billion to facilitate coal extraction at the Phulbari coal and power project in Bangladesh.
Shares in GCM Resources were up 40% to 9.55 pence each in London on Monday morning
The London-based mining and energy company said the deal with PowerChina International Group Ltd is subject to the approval of the scheme of development for coal mining submitted to the Bangladesh government.
The mine construction contract was entered into on Saturday, with PowerChina committed to assist with project financing.
GCM Resources said the work under the mine construction contract includes design, procurement, installation, construction and commissioning of mine infrastructure and overburden removal, dewatering and drainage.
This is alongside selective mining and stockpiling of valuable industrial mineral co-products that occur in the overburden, GCM Resources said, which are expected to deliver considerable cashflow for the project ahead of any coal extraction.
GCM Resources said the mine construction contract duration is four years, with overburden removal to expose first coal taking some two years.
GCM Resources and PowerChina expect to enter additional contracts covering coal extraction and associated activities. This will "support ongoing open pit mining operations and the project's commitment to deliver high quality coal supporting at least 6,600 megawatts power generation for over 30 years," GCM Resources said.
GCM Resources said a joint proposal will shortly be presented to the Bangladeshi government.
By Greg Rosenvinge, Alliance News senior reporter
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