International Coal (ASX: ICX) is on investor and on China radars as it prepares to launch a much awaited exploration program with an Exploration Target of between 800 and 1700 million tonnes of high grade coal at its promising Consuelo Project in the Bowen Basin, Queensland.
ICX is aiming to lock in a JORC resource based on the Exploration Target that has strong potential to produce a semi-soft coking coal product.
The project is within 10 km east of Glencore Xstrata Rollestone mine and is within 10-20 km of an independent rail line to Gladstone Port.
Historical evidence from the region suggests the Bandana seams could potentially yield a washed semi-soft coking coal product.
"We expect to intersect coal seams at mineable depths in the Bandanna Formation - the same formation that hosts coal produced from the Glencore Xstrata Rolleston Mine. We are looking to establish a JORC Inferred Resource and to test the coal quality," chief executive officer Glenn Simpson said.
He added that Consuelo is one of the company's most exciting prospects to date in the Bowen Basin and it was leveraging its joint venture relationships to achieve success at low cost.
"We also intend to make the most of some of the lowest exploration costs in close to a decade. We continue to back our ability to achieve significant coal finds and pursue new opportunities for coal discoveries."
The company's board has approved a detailed exploration program on EPC 2318, subject to final costings.
The exploration is design to substantially increase the company's JORC Resourcs in addition to the 1.27 billion tonne Inferred Resource at South Blackall and 28.5 million tonne Inferred Resource at its Bundaberg hard coking coal project.
Its Bundaberg hard coking coal project remains on schedule for drilling by the end of this quarter.
The company is also finalising a conceptual analysis of the Consuelo Project with the assistance of resource modelling experts ROM Resources.
It is focusing on developing its metallurgical coal projects to meet growing demand from Chinese steel mills, which show no signs of slowing.
Advanced discussions with end user Chinese corporations are continuing.
The Consuelo Project tenements EPC 2318, 2332, and applications 2327 and 2925 are located within close proximity of one another in a well-defined area of the Bowen Basin.
Together these have the potential to be a flagship project for the company providing it with a major stake in a potentially large coal prospect in the Bowen Basin, one of the world's premier coal basins.
It is located within 10 to 20 kilometres of the existing Blackwater Rail line to Gladstone that currently services the Barney Point Coal terminal, the RG Tanna Coal terminal and the Wiggins Island Coal terminal (Stage 1 under construction).
The Meteor Downs South deposit (Endocoal Limited) lies 30 kilometres to the northwest of the tenements and the Arcadia Project is just east of the project.
Modelling indicates the Consuelo 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%.
Preparations are underway to explore EPC 2318 (Part of the Consuelo Project) in the Bowen Basin following its grant in July 2013.
The company has written to the registered native title claimants regarding cultural heritage clearances for its proposed program and has made initial contact with landholders in the area.
Results of a conceptual analysis are being included in a brochure being drafted for presentation to the market and to parties interested in investing in the company.
"The Board and I are keen to see the company focus its resource on its best projects and to keep projects like the Consuelo Project moving forward," Simpson said.
"We expect that this project will place the company in a much stronger position to attract large strategic investors and look forward to updating the market in the near future on our progress."
Metallurgical coal is a near necessity as emerging economies industrialize. You can't build infrastructure without them. Investors have the opportunity to acquire shares in International Coal at its current price of $0.091 before it starts up its exploration program at Consuelo, which is a considerable re-tracement on share price last year.
There are considerable value accretive milestones ahead for ICX. Consuelo is expected to host coal at mineable depths in the Bandanna Formation, which also produces at Glencore Xstrata's Rolleston Mine.
Exploration costs are expected to be low, which lowers exploration risks.
Apart from exploration results, there is also corporate appeal from China groups knocking on the door for entry into the prized Bowen Basin. There is also an upcoming drilling program at the Bundaberg hard coking coal project, a JV with the Hancock Prospecting group.
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