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Lemur Resources Lifts Confidence Level Of Imaloto Coal

Lemur Resources (ASX: LMR) has increased the confidence of the Resource for its Imaloto Coal Project in Madagascar following an update of the geological model.

The JORC Resource now contains 135.7 million gross tonnes in situ, of which 68% is Measured and 91% is Measured and Indicated.

Lemur recently received the results for the final 64 core samples taken as part of an infill drilling program which were then incorporated into the Imaloto geological model.

The company has also received a draft version of the Mine Scoping Study, which is assessing the viability of both an open pit and underground mining operation at the project.

Blair Sergeant, managing director, commented: "Having now received the final round of laboratory results, the phase three exploration program is now officially complete.

"We are very pleased with the strong correlation between each round of laboratory results as it provides the company with a high level of confidence that Imaloto can produce a quality product with a readily available market.

"The company has now received a draft version of the Mine Scoping Study and will soon be in a position to articulate to market what the Imaloto asset contains in financial terms under various costing and pricing scenarios including the impact of any future IPP."

Coal contained in the Main Seam, which now totals 63.4 million gross tonnes in situ, is expected to generate a primary product when washed, yielding about 67% export grade thermal coal.

The Main Seam secondary product will be suitable as feedstock for a domestic coal fired power station.

This means, assuming a single stage processing, the overall theoretical yield is 100% for the entire Main Seam.

The Main Seam's Resource accounts for 47% of the total Imaloto Resource and now comprises 80% in the Measured category and 93% in the Measured and Indicated categories.

The Upper and Top Seams contain 72.3 million gross tonnes in situ which represents 53% of the Imaloto Coal Resource, with 56% now in the Measured category and 88% in the Measured and Indicated categories.

Analysis

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

With a draft version of the study now in hand, Lemur will soon have a clear indication of the economics of both an open pit and underground mining operation.

Imaloto has demonstrated that Imaloto could produce a quality product with a readily available market and with initial results of the Mine Scoping Study soon to be released, positive economics could be a potential catalyst for re-rating of the stock.

Lemur is trading well under cash backing with around A$18.1 million in cash at the end of December 2012, or about $0.13 per share, compared to its current market cap. of $8.6 million and share price of $0.06.

The company is considering options to utilise its very strong cash position, including potential acquisitions which would also be price accretive.

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