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Mackenzie

Project Overview

Location: Bowen Basin

Nearest Port: Gladstone

Rail Line: Blackwater

Mines in Region: Ensham

Coal Type: Metallurgical

Mining Method: Open Cut

Throughput: 2 Mtpa

Study: Concept Study completed August 2012

Project Details

Potential open pit coking coal

An interim review of the Mackenzie deposit has been completed which has resulted in the definition of the first 25.7 million tonnes (Mt) of JORC Indicated Resource and a 45% increase of the Total JORC Resource to 143.2 Mt (25.7Mt Indicated + 117.5Mt Inferred). 

November 2011

August 2010

Indicated Resource

25.7 Mt

-

Inferred Resource

117.5 Mt

99.0 Mt

Total

143.2 Mt

99.0 Mt

Since the August 2010 JORC Resource review a further 53 holes have been drilled and the current model now includes a total of 80 holes.  Drill hole spacing varies across the deposit but is less than 1000 metres on average. The coal sequence comprises two main coal seams being the Leo and Aquarius seams within the Burngrove Formation.

The Leo seam achieves a maximum cumulative thickness across three plies of five metres and averages 1-2 metres.  The Aquarius seam has a maximum cumulative coal thickness across five plies (A-E) of 3.6 metres and averages 2.2 metres of coal over a maximum total interval of approximately 4.5 metres. The seams strike in a general North South direction over an approximate 27km strike length, and dip towards the west at approximately 2 degrees. The main coal seams occur at depths of between 10 and 110 metres.

The 2011 laboratory analysis program has incorporated pre-treatment procedures that simulate the mine handling and coal preparation techniques. Results from the 2011 program, when compared with data from 2010 obtained from the south of the deposit, indicate a lowering of average yield3 to 26% over all seams and over the entire 27km length of the deposit for the target 15-17% ash coking product.  Variability occurs across the deposit and between the various seams with yields ranging from 11% to 71%.  Work is continuing to complete the laboratory program and determine which combination of seams is likely to produce an economic coking coal product.  The higher ash seams are also being investigated to determine whether they could form a secondary thermal coal product. Further work is under way to address beneficiation and metallurgical issues identified with the aim of improving the yield.

The company is currently focussed on two areas of the deposit with the highest potential for economic coal, Mackenzie South and Mackenzie North East.

Mackenzie South Zone

Total JORC Resource 62.3Mt (20.4Mt Indicated + 41.9Mt Inferred) 

The Mackenzie South area contains some of the highest yield results obtained across the entire project area.  Yields varied across individual seams from 15% to 71% to produce a coking coal with average reported CSN of 4.0 which appears to have been adversely affected by deterioration due to time held in the laboratory. Weathering to fresh coal ranges from 13 – 49 metres with an average of 32 metres.

Mackenzie North East Zone

JORC Inferred Resource 35.8Mt

Laboratory work continues in the Mackenzie North East Zone where an area of relatively shallow coal has been identified. This zone contains the lowest weathering to fresh coal in the deposit with an average of 14 metres and a range of 5 – 25 metres within the subcrop of the targeted Burngrove Formation.

As in the southern zone, yields vary across individual seams with results ranging from 17% to 31% to produce the targeted coking coal. Work is ongoing to improve overall product yields achieved in the North East Zone to date. The North East Zone also shows an apparent increase in rank with an average CSN of 6.5 for the washed product across all seams included in the North East Zone Resource.

Some of the North East Zone is trigger mapped as potential Strategic Cropping Land (SCL). Early site investigations indicate that a material amount of this may not meet the SCL criteria and further investigation of this is on-going.

Yield Optimisation Investigations

Work is continuing on alternative processing methods that may improve product ash and recovery. This additional analysis includes optimising pre-treatment methods and extended analysis of the fines fraction with the aim of increasing fines recovery and maximising potential coal yields. Further investigation of fine material via supplementary processing techniques is currently being undertaken with the aim of improving product yield.

A Conceptual Mining Study is planned upon the successful completion of this work to confirm potential discrete mining zones within the project area and investigate the project economics within these zones.

Close to Infrastructure – the project is situated between the existing Ensham and Curragh mines. The Blackwater rail line to Gladstone port runs west to east across the project area and Stanmore Coal has lodged an application for access to this line. Additionally, Stanmore Coal has lodged a bank guarantee in support of its application for port capacity in the Wiggins Island Coal Export Terminal (WICET) Stage 2 which is planned for completion in 2015.

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