Under the deal, coal newcomer Thelon will issue 3.5 million shares and spend $US750,000 on confirmation drilling so that a National Instrument 43-101-compliant resource report can be generated.
Once the resources are updated, Thelon will issue another 3.5 million shares on the completion of a definitive agreement.
The Vancouver company noted that portions of the property were already subject to extensive sampling and drilling work, and expects to find multiple high-quality metallurgical coal seams along with steam coal seams.
“Historical reserve and coal analysis data provided in a July 2009 report by AR Leamon CPG TN estimate inferred coal reserves of approximately 12 million tons in place,” the company said of the property in Campbell and Claiborne counties.
“Coal quality analysis conducted from core holes and test pits on the property between 1992 and 2007 have shown favorable sulfur, ash and Btu values consistent with high-quality metallurgical coals being produced in the area.”
However, the company said the previous reserve estimates were historical, predated and not in compliance with NI 43-101, thus Thelon was not treating the figures as current resources or reserves. To date, it has not independently studied the estimates or analyzed any prior exploration work.
The Jellico project has well-established power, logistics and transportation in the area, including mine access roads and a railroad that runs parallel to state highway 90.
"We are very excited and grateful for this opportunity, given the recovery and continuing strength of the domestic and foreign coal markets,” Thelon president Jason Walsh said.
“The state of Tennessee has a highly skilled labor force with a long and proud history of coal production in the Appalachians … [and we are] committed to operate to the highest standards, environmentally, in a safe and socially responsible manner to create value for our shareholders and the people whom we shall employ in the area."
Thelon Capital is also working on uranium projects in Canada, Nevada and Utah, as well as a diamond project in Canada’s Northwest Territories.
