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  • Lemur Resources Steps Up The Confidence Level Of Its Imaloto Coal Resource 0 comments
    Feb 5, 2013 5:40 PM

    Lemur Resources (ASX: LMR) has increased the confidence level of the Resource at its Imaloto Coal Project in Madagascar with 52% of the 147.5 million tonne of coal in situ now in the Measured category.

    Laboratory results from the recently completed Western Drilling Program has also allowed the company to upgrade 80% of the total Resource to the Measured and Indicated categories.

    "Our optimistic view of what value lies within the Imaloto Coal Project continues to be supported through the results of exploration programs that commenced in March 2009," managing director Blair Sergeant said.

    "We now know that the Imaloto resource can be beneficiated to produce an export grade thermal product, a lower quality coal suitable for consumption by a power station and that the project area contains sufficient tonnes to support a mining operation for a sustained period of time."

    The revised resource statement reflects the consolidated results of a three pronged drilling and laboratory analysis program which started in March 2009.

    Over this time, 110 boreholes have been drilled for a total of 13,418 metres with 293 samples having now been analysed by Inspectorate Laboratories in South Africa.

    Lemur is also waiting on the results of a 33 hole infill drilling program that was completed on 2 December 2012.

    This focused on the northern and central concessions of the Imaloto Project area and recovered 102 samples, with the company receiving the results for 35 of these.

    Imaloto

    The Main Seam at the Imaloto project spans the southern, central and northern Imaloto concessions.

    In the southern concession, the seam sits at an average depth of 31 metres, with an average width of 1.35 metres. The seam deepens and widens as it trends north. In the northern concession, the seam sits at an average depth of 135 metres with an average width of 2.40 metre

    Applying a conservative depth cut off of 100 metres for an open cast mining operation, the Main Seam contains 18.6 million open cast tonnes with the balance lying no deeper than 368 metres, a depth which is suitable to underground mining.

    Coal contained in the Main Seam, which now totals 73.3 million tonnes, is expected to generate a primary product when washed yielding about 67% export grade thermal coal.

    The secondary product generated will be suitable as feedstock for a domestic coal fired power station, making it for an overall theoretical yield of 100%.

    Lemur is currently carrying out a Mining Scoping Study to assess the viability of both an open pit and underground mining operation at the Project.

    This will consider all scenarios available to the company in exploiting the resource and includes, but is not limited to, delivering a 5,600 kcal/kg NAR product to the seaborne market, domestic supply to a regional coal fired power station or a combination of each.

    In addition, the company's beneficiation studies have indicated that the Main Seam primary product is superior to the Newcastle 5,500kcal/kg Net as Received, 20% Ash export grade thermal coal (NEW 5,500) and in line with the API4 product.

    This suggests that coal from the project would be somewhere above the NEW 5,500 but below API4.

    Strategic location

    The Imaloto Coal Project, which covers 81.5 square kilometres over five permits, is located in the Imaloto Coal Basin, the northern-most coal field in the greater Sakoa Basin of South West Madagascar, where coal mining has previously been carried out.

    The geology in the region is similar to that of the Witbank coal field in South Africa and the Gondwana coal fields of India.

    Imaloto is favourably located near the existing port of Tulear and adjacent to the proposed Soalara Port, where infrastructure planning is underway to provide a mineral bulk handling export facility.

    Madagascar is ideally placed to export coal to India, which plans to expand its coal fired power generation capacity by about 60 gigawatts by 2013. India's supply shortfall is estimated at over 100 million tonnes by 2012.

    Analysis

    The high levels of confidence for the Imaloto coal resource stands the company in good stead as it progresses its Mining Scoping Study.

    The likelihood of receiving good pricing for its coal also adds to the project economics. Laboratory tests have made the case for demand from a power station for Imaloto coal with the project area sufficient to support a mining operation.

    With the re-tracement in prices of coal stocks Lemur has now added signficant value to the Imaloto project that is at odds with its current share price.

    There is considerable scope for Lemur to be re-rated from its current share price $0.07 with the release of the Scoping Study. Good results on the remaining hole from the infill drilling may also serve as a potential catalyst.

    Proactive Investors is a market leader in the investment news space, providing ASX "Small and Mid-cap" company news, research reports, StockTube videos and One2One Investor Forums.

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