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Universal Coal encouraged by yield and quality of coal from Berenice Cygnus Project

Universal Coal (ASX: UNV)  has followed up last week's Berenice-Cygnus Project coal resource upgrade of 1.2 billion tonnes, with yield and potential coking products in line with other projects in the Soutpansberg Coalfield.

The first phase drilling revealed a much larger coal resource than expected containing 258 million tonnes as Indicated, with 953 million tonnes Inferred. 487 million tonnes of the resource has potential for extraction by opencast mining, important for early cash flows.

The company has clarified that the combined average theoretical coal product yield for the slim diameter testing of the S6, S8 and S12 subzones over the entire project area averages between 42% and 54%, of which "the primary coking coal product yield is 16% and the middling product yield of between 26% and 38%, depending on the middling product being produced."

Dr. Tony Harwood, Universal Coal's chairman  said, “the yield and quality of the potential primary coking and thermal middling products are in line with our expectations and similar to other projects in the Soutpansberg Coalfield.

"We will now proceed with a detailed interpretation aimed at identifying those areas within the larger deposit with highest yields and most attractive extraction parameters for follow-up drill-out to the Measured Category.”

Core samples from the twinned large diameter drill holes are currently undergoing analyses and tests to define the detailed coking coal and coke characteristics.

The analyses and tests include Ultimate Analyses, Ash Composition, Petrographic Studies, and Arnu Dilatation, Gieseler Fluidity, and Gray – King Tests.

Universal Coal expects results in October to provide a more detailed assessment of the coking coal seam yields, upon which the company will proceed with a Scoping Study and the aggressive drill-out of the deposit to the Measured Category.

Universal Coal’s total JORC Resource now stands at over 1.8 billion tonnes of coal across the company's coking and thermal coal assets.

Interestingly, Universal's coal resources at Berenice/Cygnus/Somerville may offer the most upside for Universal as the project area sits within 30 kilometres of existing rail and offers export potential.

Universal is well placed to participate in the strong growth in South African coal production and exports expected as rail capacity improves and moves more into balance with existing port capacity.

Universal Coal has been valued recently by analysts at between $0.60-$1.01, indicating considerable upside from the current valuation of $0.32.

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