Of the seven widely spaced holes drilled so far, Coalworks observed that the lower split of the Piercefield seam had a 1.5-2 metre thickness between two holes more than one kilometre apart, containing medium to high ash.

In the hole near the western boundary of the exploration licence area, Coalworks said there was simple splitting which formed a thicker 3.8m coal section.

Though a 0.4m-thick stone band is also present, Coalworks aims to conduct further laboratory analysis to confirm the underground mining potential.

The Bayswater seam was found to have a potential working seam of 4.4m and medium ash content.

However, the depth was around 600m which would create significant development costs alone.

The upper Wittingham coal measures covering the Whybrow, Redbank Creek and Wambo seams start from depths of greater than 150m.

Potential working sections for these seams ranged from 1.2m to 2.49m out of the holes drilled so far.

The middle Wittingham coal measures start from depths of greater than 300m and extend down to the Bayswater seam.

Coalworks said the Wittingham coal measures contained thermal and coking coal types, suitable for export thermal, coking and pulverised coal injection coal products.

The second phase of drilling consists of nine cored holes in the northern, central and southern parts of the tenement.

Private company Boardwalk, run by Queensland entrepreneur Nathan Tinkler, is funding this drilling.

The joint venture partner will earn 50% of the Ferndale project for spending up to $25 million on a bankable feasibility study for open cut mining along with a prefeasibility study on underground mining development.

With an exploration target of 350-530 million tonnes of resources, maiden resources are expected to be revealed near the end of the September quarter.

Coalworks shares closed down 2.9% to 83c yesterday.