Maiden JORC Resource Statement for EPC 1230

Click on this link for the maiden JORC Resource Statement for EPC 1230 (20 October 2011).

Summary Bowen Basin Exploration Portfolio

The tenement portfolio (comprising five granted Exploration Permits for Coal [EPCs] and one Exploration Permit for Coal application [EPCA]) is located in the Emerald - Blackwater - Rolleston region of Central Queensland. Two key tenements are situated amongst several existing coal mining operations with established access to existing rail and port infrastructure (Figure 1).

Figure 1. Location of coal exploration permits (EPCs) and application (EPCA), coal rail network and coal export terminals.

Table 1. Summary of key geological and infrastructure attributes for the acquired EPCs and EPCAs.

The acquired tenements are interpreted to contain up to five principal coal-bearing stratigraphic sequences (Figure 2) at depths ranging from surface to several hundred metres (Table 1).

Figure 2. Simplified north-south section of Bowen Basin coal sequences showing target horizons on each tenement.

Description of Project Areas

EPC 1230 – Comet Ridge

Exploration Permit (Coal) 1230 consists of 86 sub-blocks and was granted on 10 September 2008. The tenement covers a structural dome (the Comet Anticline) interpreted to host the coal measures of the Lower Permian German Creek, Fair Hill and Burngrove sequences (Figure 3). The tenement has a high potential for coal resources amenable to surface and underground mining similar to the adjacent Washpool Project (Aquila Resources) and McKenzie River Project (Stanmore Coal). The tenement is surrounded by the existing Ensham, Jellinbah East, Blackwater and Curragh operating coal mines in the Rangal Coal Measures that produce thermal, soft-coking and coking coal products.

Exploration has focused on the Fair Hill and Burngrove coal sequences in the southern eastern corner of the tenement. Previous drilling by Ingwe Australia Pty Ltd (1996) intersected coal seams within the Fair Hill Formation including CR005 (9.89 metres from 53.5m) and CR007 (5.99 metres from 5.3m)

A 25 hole RAB drilling program completed in February 2011, successfully intersected coal over a significant area in the southern east portion of the tenement. A total of 17 holes intersected two separate coal intervals characterised by:

A multi-ply, banded coal seem ranging from 5 to 14 metres in thickness present from surface to a deepest intersection at 120 metres vertical depth; and
A second coal seam ranging from 0.8 to 2.2 metres in thickness was intersected some 25 metres stratigraphically below the main coal bearing horizon.

Preliminary interpretation of geological geophysical data indicates both coal horizons dip gently to the south-southwest at approximately 3-5 degrees and are tentatively correlated with known seams in the Fair Hill Formation.

Drill chip samples submitted for preliminary float/sink testing (F1.40) spanned a wide range of values reflective of non-selective nature of the samples tested. Based on the initial results, the Company believes that preliminary results indicate that selected plies within the upper seam have potential to produce a coking coal product following washing. Considerable additional quality and metallurgical test work is required before definitive information with respect of ultimate coal quality and processing characteristics can be determined. Sampling of Seam B was not undertaken as part of this initial drilling program.

An initial Exploration Target of 200 - 250Mt of raw coal over the exploration area (some 8,000ha) has been estimated by SRK Consulting based on the data derived from the current and historical drilling. The Exploration Target is based on a net coal thickness in the range of 5 - 8 metres and an average coal relative density of 1.6 g/cc.

The secondary target is the Crocker-German Creek coal sequence exposed across the central part of the tenement. Drilling within, and peripheral to the northern half of the tenement by Ingwe (1996) indicate that the Crocker-German Creek coal sequence is present at depth and has potential for economic coal seams.

The Blackwater rail system traverses the northern part of the tenement, potentially providing access to the coal export terminals at the Port of Gladstone.

Figure 3. Southern part of EPC 1230 showing location of drill holes with Seam A (lower) thickness contours and depth to top of seam.

EPC 1580 & EPCA 1801 – Emerald

Exploration Permit (Coal) 1580 comprising 75 sub-blocks was granted on 3 July 2009.  An application for the easterly adjoining EPCA 1801, comprising 7 sub-blocks, was lodged on 1 July 2009.  The tenement is surrounded by existing mines (Ensham, Kestral and Minerva) and coal deposits (Valeria, Cullin la Ringo). Existing rail lines traverse the tenements and distance to the nearest port (Gladstone) is 340 kilometres.

Historical exploration results from seismic surveys and drilling on these tenements indicate that the Rangal Coal Measures extend over much of the tenements at moderate depths. Seismic interpretations also indicate a major fault has uplifted the Minerva Mine coal sequence on the western side of the area to shallow depths forming a substantial exploration target (Figure 4).

Figure 4. Location of EPC 1580, EPCA 1801 and EPC 1720 tenements in relation to 2008 Queensland Government map of Bowen Basin showing surface solid geology and major infrastructure.

EPC 1720 – Cullin La Ringo

The EPC 1720 application comprises 27 sub-blocks overlying conceptual shallow thermal and coking coal targets in the Burngrove, Fair Hill and Crocker (German Creek) sequences west of a major fault structure. To the east of the fault structure, the Reids Dome sequence which hosts the Minerva and Cullin la Ringo coal deposits is interpretated to be present at shallow depths (Figure 4). The Fair Hill coal sequence sub-crops on the tenement and the stratigraphically lower Reids Dome coal sequence is a significant target across the west part of the tenement.  Up to eight seams of coal may exist in the exploration tenement area with a coal quality inferred to be analogous to that of the Minerva Mine and Cullin la Ringo deposit. The Minerva Mine coal rail line traverses the tenement.

EPC 1505 – Spring Creek

EPC 1505 application comprises 199 sub-blocks located some 35 kilometres south west of Xstrata’s Rolleston Coal Mine, is a future high priority exploration target.

The tenement is situated immediately south of MacArthur Coal’s West Rolleston Deposit, located on the Springsure Shelf, west of the Springsure Anticline (Figure 5). The West Rolleston coal seams occur within the Bandanna coal sequence and are interpreted to dip south-southwest directly into and across EPC 1505.

Figure 5. Location of EPC 1505 tenement in relation to 2008 Queensland Government map of Bowen Basin surface solid geology and drainage. Regional exploration broadly shows the Bandanna coal sequence underlies the entire tenement area.

The principal exploration target is the gently dipping Late Permian Bandanna coal sequence west of the Merivale Fault, traditionally regarded as the western edge of the Denison Trough and the Southern Bowen Basin.

Drilling by MacArthur Coal at West Rolleston has defined 4 seams (A, B, C, and D seams) with typically 7.5 metres of coal occurring over a 13.7 metre interval. The B, C and D seams approach near-coalescence in the east where the cumulative coal can be 10 metres over a 14 metre interval.

Published coal quality information indicates the West Rolleston deposit coal is similar to the Rolleston export thermal coal. A raw coal blend appears ideally suited to domestic power with a washed B, C, and D seam product suitable for export.

Parts of the tenement are covered by a veneer of Tertiary Basalt mesas underlain by the Triassic Rewan Formation. The Bandanna coal sequence is expected to be closest to surface in heavily dissected valleys that traverse the tenement area.

EPC 1505 is considered to have excellent potential for the discovery of very large thermal coal resource which is ideally located approximately 30 kilometres from the existing Rolleston rail line.

EPC 1319 – Jack Creek

The Jack Creek Application comprises 214 sub-blocks located southeast of Rolleston Mine and is interpreted to overlie the Bandanna (Rangal) Coal Measures (Figure 6) with similar seam characteristics. A number of historic gas exploration wells in the area confirm the presence of the coal sequence with a shallowest depth to target of approximately 600 metres.

Figure 6. Location of EPC 1319 tenement in relation to 2008 Queensland Government map of Bowen Basin surface solid geology and structure. The Bandanna coal sequence occurs at depth across the entire area.

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