The resource is double the company’s exploration target of 500-550 million tonnes.

East said the coal seams at Blackall are low rank, low energy coals and washability data indicates a medium ash product with generally good yields, which would be suitable for domestic thermal coal markets.

The company said its main priority was to carry out infill drilling to convert the resource to the indicated category.

The northern portion of the project has not yet been drill-tested and East said it was confident that further resources would be delineated.

Further drilling will begin in the fourth quarter of 2009, subject to weather conditions and rig availability.

Shares in East soared 37% yesterday to A20.5c on the news, but this morning, shares were down 17% to 17c.