The agreement will provide the platform for ICX to earn up to 71% of the Don Juan project (EPC 2286) within the next 2 years.
It places the company in a well-known coal producing basin with rich coal measures that holds export potential at a relatively low cost of entry as the Surat Basin is known to produce high quality, low ash, and high yield thermal coals at open cut depths.
Following a small drill program, ICX may also be able to quickly define a JORC Inferred Resource.
The exploration there will also enable the company to extend its resource position with an exploration target in the range of 20 to 435 million tonnes with up to 10 to 210 million tonnes expected at depths of less than 100 metres.
International Coal's chief executive officer Glenn Simpson said, "The Don Juan Joint Venture will provide a relatively low cost entry into the Walloon Coal Measures of the Surat Basin, Development of this project is expected to yield an inferred resource in a target area with known thermal coal export potential."
Today's deal marks the culmination of negotiations on a term sheet agreed to last November. ICX is likely to achieve its 71% interest by the following milestones:
- 20% initial interest upon issue of 3 million ordinary shares;
- spending $250,000 exploring the tenure within the first 12 months (Phase 1) to achieve a 46% interest;
- an additional spending of $450,000 in the subsequent 12 months (Phase 2) to achieve a 71% interest; and
- International Coal will issue a further 3 million shares to Coal Face at the completion of Phase 1 and 2.
International Coal is working with Coal Face and the venture's preferred supplier, the Moultrie Group for the upcoming drilling program. The initial drilling program will comprise two chip holes with down hole geophysics.
It expects this program to yield a small JORC inferred resource, and based on those results the venture will progress further with a second phase, which aims to capitalise on the significant exploration target of 20 to 435 million tonnes identified for the project.
An environment audit is being undertaken by an independent expert and the company is engaged in finalising final landowner and cultural heritages clearances.
The joint venture provides International Coal the opportunity to capitalise on a potentially huge resource in a coal rich region.
Mines in the wider Surat/Moreton Basin region including New Acland, Jeebropilly, Cameby Downs and Wilkie Creek already produce export quality thermal coal from the Walloon Coal Measures.
With the entry into Surat, ICX's suite of coal portfolio in Queensland includes interest in Bowen, Galilee, Eromanga, Maryborough and more recently Bundaberg.
The Surat Basin sub blocks hold promise as the Basin is known to produce high quality, low ash, and high yield thermal coals at open cut depths.
Significantly, there is an Exploration Target of 20-435 million tonnes identified with up to 10-210 million tonnes expected at depths of less than 100 metres. There is also export potential at a relatively low cost of entry.
An initial phase of drilling is currently being finalised adding a catalyst for investors with newsflow. An imminent JORC would add another in the near term.
With holding all the lucrative coal tenements, ICX could potentially soon join the big league.
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