Carabella Resources' 100% owned coking coal resource, Grosvenor West, is located at the Mabbin Creek tenement in Queensland.
Carabella completed a preliminary drilling program at the prospect late last year – resulting in the delineation of a maiden JORC resource of 91.7 million tonnes of coking coal.
This is comprised of 21.8Mt of indicated resources and 69.9Mt of inferred resources.
The drilling program also identified a further exploration target of around 30-45Mt.
As part of its preliminary drilling program, Carabella also completed three cored boreholes adjacent to previously drilled open hole sites.
The company commissioned ALS Laboratory Group to conduct a detailed ply-by-ply sampling over the roof, floor and coal intervals from these three core holes.
This resulted in 98 samples being analysed for typical raw coal quality parameters, which confirmed the raw coal quality was Goonyella Lower coking coal.
Seam composites of these ply samples have been forwarded to the laboratory for detailed float and sink washability testing.
“We are looking at releasing these results once we have completed the remaining cores progressively during this year,” Carabella managing director Mitch Jakeman said.
“In February this year, we used a helicopter geophysical technique called ‘Sky Tem’ to assist our preliminary exploration program.”
Jakeman said it was a technique being trialed in the coal industry.
“A lot of people are interested in both the technical results and also to see what we can add to our resources or how we can improve our exploration program.,” he said.
Carabella trialed Sky Tem once the heavy rains began in Queensland earlier this year.
“We knew drilling was going to be stopped with the high likelihood of the cyclone season or floods,” Jakeman said.
“But this probability became a reality with major flooding in Queensland and most explorations stopped for around three months.
“In this case and hopefully others, this technology assists companies undertaking non-intrusive exploration on land – without being restricted by wet ground conditions.”
Jakeman said he was thankful the project grounds were not inundated with flooding.
“We’ve really been fortunate enough not to have sustained damage to any of our equipment and also find that the areas we are exploring do not flood,” Jakeman said.
The company also plans to carry out an extensive two-dimensional seismic program at Grosvenor West before July.
“We will use the results of this program to identify further target sites for an infill drilling program to define other project areas,” Jakeman said.
The company also plans to begin an environmental impact study program for the project in the coming months.
“We’re going to go through the approvals and bankable feasability study over next two years, so we can hopefully start producing coal by 2015,” Jakeman said.
All signs look positive for such plans at the moment, given the project’s close proximity to existing operating mines, as well as rail, road and power infrastructure.
The project is located adjacent to the Goonyella North, Goonyella Riverside complex, Grosvenor and Moranbah North coking coal mines, and north east of the Rugby coal deposit.
Together, these mines represent a total of around 2.4 billion tonnes of JORC coking and thermal coal resources and deposits.
“They total existing and planned production in excess of 26 million tonnes per annum – which is a pretty good indicator of what is out there,” Jakeman said.
The project’s eastern boundary is also situated within three kilometers of each of the Goonyella, Riverside and Moranbah North rail loops, while the Dalrymple Bay Coal Terminal is just 197km away.
“We’re also situated approximately 238 kilometers from the Abbott Point Coal Terminal via the Northern Missing Link rail line, which is under construction at the moment,” Jakeman said.
The company has already secured accommodation and lodged an initial expression of interest to secure port requirements at the Abbot Point Terminal 4 multi-user facility.
Jakeman said he believed the company was a sound investment.
“We are an emerging coking coal development company that has a large Queensland tenement holding, with the potential for a number of projects on the same lease,” he said.
“This will provide synergies and cost reductions if we can prove them to production.
“Our strategy is to fast-track development of Grosvenor West to production and there’s also further exploration upside at Mabbin Creek.”
Jakeman said the company was also backed by a very experienced management team.
This is a team that boasts a strong track record in the coal sector at a number of major companies.
Jakeman said the company was unique because there were very few hard coking coal juniors listed on the ASX that were situated in the northern Bowen Basin.
“Most have been owned by the big boys or already taken over,” he said.
“Coking coal is very scarce because of the massive demand of steel mills all around the world and people trying to secure resources for the future.”
Jakeman said while Carabella had entered into a number of discussions with trading houses in the market, the company was remaining focused on the end game.
“We’ve got a sound financial base at the moment and some solid plans, so we’re really looking to drive more value in the business before we engage with more investors,” he said.
Carabella recently placed16 million shares at an issue priceof A$1.80 per share, to raise approximately A$29 million.
“The proceeds will be used to fund the next year of the project’s accelerated exploration and development program,” Jakeman said.
“In particular, a portion of the funds will be used to start our bankable feasibility and environmental impact studies.”
Jakeman added the overwhelming response from the investment community was testament to the quality of the company’s development strategy and thanked all involved for their unwavering support.
“The funds raised will ensure we are well positioned to develop Grosvenor West into a coking coal mine,” he said.
“The broadening of our institutional register should serve us well, as we move from an explorer to a mine developer.”
Carabella successfully listed on the ASX late last year
It raised a total of A$12 million from both domestic and overseas investors.
In its first day of trading, the company’s share price opened at 74c, reached a high of 97c before closing at 86c, a 115% premium to its issue price of 40c.
“We look forward to achieving further milestones and continuing to deliver value to our shareholders over the long term,” Jakeman said.
*A version of this report, first published in the May 2011 edition of RESOURCESTOCKS magazine, was commissioned by Carabella Resources