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Shenhua to start drilling major NSW project

AFTER forking out $A299.9 million ($US228.15 million) to the New South Wales government for the Watermark area exploration licence near Gunnedah, China Shenhua Energy is preparing to kick off drilling.

Blair Price
Shenhua to start drilling major NSW project

Every Day Mining Services recently announced its subsidiary, GOS Drilling, had won a tender for seven surface rigs and this week Shenhua Watermark Coal project director Joe Clayton told International Longwall News GOS was the project’s preferred drilling contractor.

He said the contract was in its final review and sign-off was expected in the next fortnight.

“It is a schedule of rates contract to cover the first phase of exploration drilling for the Watermark project in the Gunnedah area,” Clayton said.

While EDMS chief executive officer Ashley Pattison recently told Boardroom Radio the contract would be worth $5.5-6 million per annum, Clayton said the final contract value would depend on the physical conditions encountered in the drilling area.

Clayton said the first phase of drilling was scheduled for nine months, but the length of time would depend on the drilling conditions encountered and equipment availability.

He added there were discussions with GOS to review options to shorten the exploration program.

Clayton said the drilling would underpin a full mine feasibility study.

He also told ILN the biggest challenge for Shenhua would be gaining NSW Department of Planning approval for the environmental assessment.

As part of Shenhua’s deal with the NSW government, announced last year, the coal giant will pay another $200 million for a mining lease for Watermark, which it hopes will host more than 1 billion tonnes shallow coal resources with thermal coal of domestic and export quality.

The five-year exploration licence covers 190 square kilometres. An initial exploration program by the NSW Department of Primary Industries is the only previous work done in the area.

The Watermark area could be linked up to the Port of Newcastle some 270km away via a branch railway passing through its northeastern side.

EDMS shares were trading unchanged this morning at 4.3c.

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