Coal news and updates

Fox Resources (ASX: FXR) expects to start drilling at its highly prospective Bundaberg Coking Coal Project in Queensland within two weeks after securing landowner approvals.

 

Notably, International Coal (ASX: ICX) and Hancock Prospecting have recently demonstrated the continuity of coal seams on the boundary of their EPC2196 and Fox’s EPC1523.

 

In addition, a Heritage Agreement has been executed with the Port Curtis Coral Coast Registered Native Title Claimants covering EPC1523 allowing a heritage survey covering the proposed drill sites to be completed later this week.

 

“We are very encouraged by the recent QCI/ICX Joint Venture results on the adjacent tenement, immediately to the north of EPC1523 and we congratulate them on their success,” chairman Terry Streeter said.

 

“The commencement of drilling designed to confirm the continuation of the coal seams intersected by our neighbours is of paramount importance to Fox and we are extremely pleased to report that all approvals have been received and we hope to commence drilling within the next few weeks.”

 

The project has good access to infrastructure necessary for commercial development.

 

Fifteen of the sixteen Queensland coal tenements including Bundaberg, Styx, Emerald, Springsure, Alpha, and Eromanga have now been transferred to Fox Resources.

 

Drilling details

 

The company has secured landowner approvals for six holes of the planned program of vertical rotary hammer boreholes to varying depths along five nominal west-to-east-lines.

 

All holes will be geologically and geophysically logged. Coal chip samples will be tested for moisture and crucible swell number.

 

This will identify if the coal seams intersected in EPC2196 at depths of 250 metres to 588 metres are continuous and extend into EPC15233.

 

International Coal and Hancock Prospecting have a 28.5 million tonne Inferred Resource with hard coking coal characteristics at their project in EPC2196.

 

It also seeks to determine if the coal seams correlate with and are continuous to shallow seams intersected in historical drilling.

 

Once drilling is completed, a structural model will be generated so as to allow resource estimation.

 

This will include historical drilling though inclusion of the Upper Burrum Coal Measure coal intersections is of limited value as the deepest historical holes only penetrated down 120 metres.

 

The company also intends to expand its exploration activities on its existing Queensland coal tenements, acquired in late December 2012 with projects including Bundaberg, Styx, Emerald, Springsure, Alpha, and Eromanga.

 

Bundaberg Coking Coal Project

 

Based on several geological consultants’ reports and previous investigations, the most promising area within EPC1523 is a 15 kilometre north-south corridor along the western margin of the tenement. 

 

This corridor has the potential to host a small to medium sized coking coal deposit in the order of 5 million tonnes to 20Mt.

 

Multiple coal seams ranging from 0.2 metres to 2 metres thick may be present over a stratigraphic interval of 5 to 20 metres. The available coal quality test work indicates that prime coking coal is potentially present.

 

Funding

 

Fox had in early October secured $3.8 million in funding from the Lind Partners’ Australian Special Opportunity Fund to progress its exploration program.

 

This highlighted the potential attributed to the project.

 

Analysis

 

The strong results from the adjacent EPC2196 is a signpost for the coal prospectivity of the region and provides Fox Resources with a good indicator of what to expect with its upcoming drilling program.

 

Chairman Terry Streeter is the founder and chairman of Western Areas (ASX: WSA), a $541 million market cap., and has a strong track record in adding value for investors.

 

Drilling success at the Bundaberg project will undoubtedly be value-accretive for Fox with a very undemanding Market Cap of $8 million that is leveraged to success.

 

Source: http://www.proactiveinvestors.com.au/