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International Coal's Resource Swells To 1.246Bt At South Blackall

International Coal (ASX: ICX) has impressed with a 73% increase to 1.246 billion tonnes in JORC Inferred Resources at South Blackall (EPC2197), the South Gumbardo Creek Project.

Drilling results from the Phase 2 program identified better and thicker coal seams across the project area - with the majority of coal seams encountered between 35 and 150 metres.

Another important outcome from the program is that it vastly improved the correlation of the coal seams and confidence in their continuity.

Drill Hole SB16 has identified a single seam of greater than 5.50 metres at a depth of just over 90 metres, with the cumulate seams within this hole is significantly higher.

International Coal said that washing and treatment of raw material could be expected to increase Gross Calorific Values by around 10 - 20% from raw / unwashed values, and that modelling indicates a resource of simple structure with no faulting and shallow, simple synclinal structure with dips of 1-3o on the limbs.

Highlighting the landholding of International Coal, the South Gumbardo Creek project represents just one of a number of very significant landholding in the region, with the company holding in granted or application form, an additional 10 projects surrounding EPC2197 - covering over 8000 square kilometres in the Eromanga basin - a developing region.

Resource calculations

The new tonnage estimate was completed incorporating five of the Stage 2 boreholes as Points of Observation, but with a slightly reduced sphere of influence, which delivered the around 1.25 billion tonne resource.

The stage 2 drilling program

Breaking down the stage 2 drilling program, a total of 25 holes have been drilled in the area, at 16 sites, with one of these holes taking HQ-sized core from the twenty-two main target seams.

In general drilling typically extends down to 150 metres, although International Coal said that around a fifth of holes were drilled to 250 metres - targeting the potential for deeper resources.

The boreholes also faced difficult drilling conditions with the weak clastic strata (as identified by geotechnical lab testing in SB014C) causing unstable sidewall conditions. All have been downhole geophysically logged, albeit mostly through HQ rods.

Thirty-nine seams were identified, of which 22 seams were deemed suitable for modelling based on consistency across the tenement and thickness (greater than 0.20m). Correction of coal seams to geophysical logging has been completed, with slightly thicker seams being encountered in Stage 2 drilling.

The company noted that interpretation of individual coal seams is still challenging as all boreholes are being logged through steel HQ rods, and drilling in the eastern part of the EPC has shown to be in an area of depressed groundwater levels such that the boreholes are often dry until about 80 metres.

Deposit dips the south and east

Drilling at South Gumbardo Creek has established that the deposit gently dips to the south and east and is relatively flat, with no significant geological structures having been identified at the project, except for one proposed fault west of SB006R, to account for seam repeats of the WIN02- 04 interval.

The surface topography is gently undulating and has minor drainage across the land and in the west, a slight topographical high is present in the form of Mt Gibson.

Analysis

Highlighting the landholding of International Coal, the South Gumbardo Creek project represents just one of a number of very significant landholdings in the region, with the company holding in granted or application form, an additional 10 projects surrounding EPC2197 - covering over 8000 square kilometres.

EPC 2197 is shaping up to be a large tonnage thermal coal project which already has a massive Exploration Target of 8.0 billion tonnes to 9.0 billion tonnes.

ICX is known to be extremely bullish as to the potential for South Blackall project and its ability to host a potential mine to export significant levels of thermal coal to power hungry Asian markets.

The 73% jump in resources to 1.5 billion tonnes at the project realises this potential.

While the ICX share price has re-traced on the pull-back on coal prices, the company is making significant strides at its Queensland coal projects and appears to offer compelling value and upside from current prices.