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Location

The Hughenden Project is located in the northern end of the coal bearing Galilee Basin in Queensland, Australia and covers approximately 6,500 square kilometres of coal exploration permits, all of which have been granted.

The Hughenden project is made up of the following tenements EPCs 1300, 1394, 1477, 1478, 1479, 1480, 1574, 2047, 2049 and 2105 contained in the northern end of the Galilee Basin, Queensland Australia.

There are two coal bearing stratigraphic horizons within the Hughenden Project area which are the primary exploration targets:

  • Permian aged Betts Creek Beds of the Galilee Basin; and
  • Jurassic aged Blantyre Beds (Injune Creek Group) of the Eromanga Basin.

The project has the scale and potential to support multiple underground mining operations producing substantial export thermal coal tonnages, which are located in close proximity to key supporting infrastructure such as the Mt Isa to Townsville rail line. Drilling operations at the Hughenden Project have uncovered significant coal seams suitable for production as an export thermal product. In particular EPC1477, where an interpreted 11.9m of net coal within the Permian age Betts Creek Beds is made up of multiple seams up to 5.5m in thickness.

The Galilee Basin has relatively benign geology which allows the evaluation of coal deposits with an increased level of confidence when compared with deposits in other basins.

Map-1-GUFGalileeprojectsApr2013

Resource and Exploration

In February 2012, independent mining consultants Moultrie Group defined an estimated JORC Inferred Resource of 1.619Bt of thermal coal within EPC1477 and EPC1478 at depths suitable for underground mining. Importantly this resource domain represented less than 2% of the Hughenden Project total tenement area.

Moultrie Group had also previously completed a comprehensive compilation and assessment of recent and historical geological and exploration data in September 2011 and developed an Exploration Target* of 0.285 Bt to 2.83 Bt for the Hughenden Project.

A review of exploration results and a significant geological modelling analysis of the basement in the area of the resource were conducted in mid-2012.  Following the inclusion of an additional four (4) drill holes and additional drilling from a deepened hole, along with quality results not previously available, the geological model was updated to reflect the increased level of understanding of the geology.

In July 2012 an upgraded Indicated Coal Resource for the Hughenden Coal Project of 132.9Mt and a revised Inferred Resource of 1,076Mt of thermal coal in the Permian Betts Creek Beds in the northern Galilee Basin at depths suitable for underground mining (depths 350 -600m) was released.

As support for the calculation of Indicated Resources, a detailed statistical and geostatistical analysis of both the coal seam thicknesses and raw coal quality results was initiated, that investigated both the downhole and spatial continuity of the data distributions. Apart from defining geological domains within the Indicated Resource area, the study provided strong evidence that the distance between Points of Observation for the Indicated Resource could be reset to 1,200m point to point without any loss of confidence. This distance is consistent with figures being reported by other Galilee Basin explorers, most notably Hancock Coal.

The stratigraphy of the coal reported in this resource correlates well with regional stratigraphy that has been previously published for the Galilee Basin, with the Betts Creek Beds Coal Sequence proving similar to that defined at the Adani – Carmichael Deposit and the Hancock – Alpha Deposit.

*Reporting of Coal Resources have been estimated in accordance with the Australasian code for reporting of exploration results, mineral resources and ore reserves (JORC Code, 2004) and the Australian Guidelines for Estimating and Reporting of Inventory Coal, Coal Resources and Coal Reserves, 2003 Edition.

All statements as to exploration targets made by Moultrie Group and statements as to potential quality and grade are conceptual in nature. There has been insufficient exploration undertaken to date to define a coal resource and identification of a resource will be totally dependent on the outcome of further exploration. Any statement contained in this report as to exploration results or exploration targets has been made consistent with the requirements of the Australasian code for reporting of exploration results, mineral resources and ore reserves (JORC Code, 2004).

Infrastructure

Hughenden is located in close proximity to existing infrastructure with the Mt Isa to Townsville rail line running across the project area.

TerraCom signed a Memorandum of Understanding (MOU)  with the Port of Townsville Limited (POTL) in December 2010, to conduct a feasibility study on the logistics of exporting coal through Townsville Port via the Eastern Access Rail Corridor and utilising the Townsville State Development Area.

In December 2012, TerraCom agreed to partner to major logistics company, Asciano Limited, to develop an integrated ‘pit to port’ solution for the Hughenden Project.

Feasibility and development

TerraCom has successfully delineated a substantial coal resource at the Hughenden Project, suitable for underground mining methods. Further drilling to improve the confidence level around this resource will continue in parallel with other exploration work being undertaken in the region.