International Coal (ASX: ICX) and Coal Face Resources are a step closer towards securing the three exploration tenements that make up the highly prospective Consuelo coking coal project in the Bowen Basin, Queensland.
This follows their acceptance of the Queensland Government's proposed terms and conditions of grant for EPC 2318, 2327, and 2332.
EPC 2318 and 2332 will now proceed to the Minister for consideration of final grant while EPC 2327 remains subject to the expedited native title procedures.
"The Consuelo Project will be a flagship project for the company. It places the company on the ground floor of a potential semi-soft coking coal project with open-cut and underground potential in the Bowen Basin - Australia's premier coal producing basin," chief executive officer Glenn Simpson said.
"We are just down the road from one of Glencore Xstrata plc's mines (Rolleston), and are near existing rail and port infrastructure."
Planning for exploration in 2013-14 is well advanced subject to cultural heritage and landholder clearances.
"Some field and desktop work needs to be done upon grant to pin down the drilling program, but we will advise the market of the details of the program as soon as this is completed," Simpson added
"We will be seeking to progress the program as quickly as possible.
"There is strong interest in this project from strategic and industrial groups in the Asian market who have a long term view for the project and its potential as a mine. We have developed deep links into this market and this announcement demonstrates the project is close to grant and commencement."
The Consuelo Project has an Exploration Target of between 800 million and 1,700 million tonne and will be operated by International under a joint venture agreement that allows it to earn up to a 71% interest in the project.
The Consuelo tenements are all within close proximity of one another in a well-defined area of the Southern Bowen Basin between 10 kilometres and 20 kilometres from the existing Glencore Xstrata Rolleston open pit mine and just 25 kilometres to 30 kilometres from the rail haulage line that runs adjacent to the 173 million tonne Rolleston Mine.
The existing rail line (Blackwater line) currently services the Barney Point Coal terminal, the RG Tanna Coal terminal and the Wiggins Island Coal terminal, which is currently under construction.
The Meteor Downs South deposit operated by Endocoal (ASX:EOC) is around 30 kilometres to the north west of the tenements and Bandanna Energy's (ASX: BND) Arcadia Project is just to the east of the project.
Consuelo targets the Late Permian Bandanna Formation with modelling suggesting the project could host tonnages suitable for both open cut and underground mining.
Coal quality based on historical data from the region indicates average raw ash content ranges from 8% - 30% with moisture 3% - 8%.
Washability studies and clean composite results released by Bandanna in the neighbouring Arcadia Project have provided evidence that the Bandanna seams could make a semi-soft metallurgical coal with a swell of 2.0 - 4.0 possible.
Six significant seams (X,A,B,C, D and E) have been identified in the Bandanna Formation in the local area with average modelled seam thicknesses of up to 2.8 metres and maximum modelled seam thicknesses of up to 6.06 metres for the B Seam in the project area.
International has the option to increase its interest in Consuelo to 71% from the existing 20% by supporting an extensive exploration program of $6 million over the next three years.
It had issued 17 million shares, 10 million options and $100,000 to Coal Face for the initial 20% interest.
There are known to be big wraps on the Consuelo Project, with an exploration target of 800 million-1.7 billion tonnes with potential for semi-soft coking coal operation with open-cut and underground potential. However, its other main point is its proximity to Glencore Xstrata plc's Rolleston open pit mine and only 25-30 kms from the rail haulage line that runs adjacent to the Rolleston mine.
The existing rail line (Blackwater line) currently services the Barney Point Coal terminal, the RG Tanna Coal terminal and the Wiggins Island Coal terminal.
ICX is known to have received plenty of strategic interest in Consuelo from groups in Asia who would want to lock in future supply for the long term and see the project's potential as a mine. Which is not surprising given the region's Bandana seams could potentially yield a washed semi-soft coking coal product.
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.