Please Note: Blog posts are not selected, edited or screened by Seeking Alpha editors.

Ascot Resources Hits Thick Coal Seams In Colombia, Potential Metallurgical Coal

Ascot Resources (ASX: AZQ) is off to a flying start to resource drilling at its Titiribi coal project in Colombia with initial results showing multiple thick coal intercepts and the potential for a metallurgical coal product.

There were some impressive coal seams intersected within 125 metres of drill hole depth including 7.3 metres cumulative thickness between 60 and 68 metres; and 13 metres thickness between 110 and 124 metres.

Importantly, this carves out the path towards completion of maiden JORC Resource and Scoping Study in the June quarter of 2013.

The phase one diamond drilling program is around 40% complete, with 591 metres drilled and 31 coal seams intersected, including 12 seams with intersections in excess of 0.8 metres.

Coal quality

An independent review of the coal quality data found that potential coking properties, as defined by the Free Swelling Index (NYSEMKT:FSI), for the deposit were generally high and excellent for markets.

Therefore, the primary use of the coal is likely to be for the metallurgical coal market in some capacity, subject to other test work.

On average, all samples tested very low ("ultra-low") raw phosphorus in coal.

Comparable products in terms of FSI, ash value, total moisture and volatile matter are currently traded in the metallurgical coal market, with the Titiribi deposit's "ultra-low" phosphorus in coal being a potential market advantage.

Scoping Study

The remaining six drill holes will confirm the continuity of coal seams and guide subsequent resource interpretation and modelling work.

Modelling of the coal deposit will enable the finalisation of mine planning work for the Scoping Study, which is due to be completed in the June quarter of 2013, to assess the economic viability of the Titiribi coal project.

Ascot also plans to produce a Coal Reserve estimate based on Feasibility and development studies if the results of the Scoping Study confirm the viability of the project.

The initial Scoping Study is targeting a low capital and operating cost mining operation with a simple supply chain which will target both the domestic and export markets.

Colombia - a major coal producing nation

The Titiribi Project provides Ascot with the opportunity to join BHP Billiton, Anglo American, Xstrata, Glencore and Drummond in the growing Colombian coal market, which is the world's fourth largest exporter of coal.

Columbia has the largest identified coal resource base in South America.

Colombia has the largest identified coal resource base in South America with Reserves of 6.8 billion tonnes.

In 2012, Colombia's overall coal production was approximately 90 million tonnes, which is an increase over 2011 and recent media reports suggest that exports could reach 150 million tonnes by 2020.

Growth is expected to be primarily driven by developing economies appetite for energy and steel consumption.


These are impressive results from Titiribi coal project in Columbia, coal seam thickness are encouraging as is coal quality including high FSI values.

There are short term price and valuation catalysts that include the completion of a maiden JORC compliant resource, and results of a Scoping Study that is scheduled for completion Q2 of 2013.

The project boasts potentially low capital expenditure, with a likely open-pit operation that is strategically located within close proximity to existing infrastructure.

Mining techniques appear relatively simple and a supply chain to market has been identified.

Ascot is aiming for a very fast track development at its Titiribi Project targeting initial production by mid-2014 of 250,000 tonnes per annum.

Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX "Small and Mid-cap" stocks with distribution in Australia, UK, North America and Hong Kong / China.