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Baru Resources targets coking coal in Galilee Basin within months

Baru Resources (ASX: BAC) is off the starting block at its north Queensland Coal Project with preparations for the first round of drilling at the West Galilee Project well advanced and negotiations with local farmers progressing.

The West Galilee Project comprises six contiguous, granted exploration coal permits and one application exploration coal permit covering an area of 6,732.4 square kilometres.

The project area is some 375 kilometres east of Mt Isa and 16 kilometres west of the town of Richmond, close to the northern margin of the Eromanga basin, which overlies the coal bearing Galilee Basin and in part the newly defined Millungera Basin.

It is located 110 kilometres west of Guildford Coal’s (ASX: GUF) 1.036 billion tonne Hughenden Project, which lies at the northern end of the Galilee Basin.

Historically there has been very little exploration for coal deposits within and around the project area and a majority of the drilling in the surrounding areas were either targeted at petroleum or stratigraphic (geological) holes.

However, there has been increasing interest in the northern portion of the Galilee basin over the last 12 months.


Galilee region exploration hotting up
 
The potential of the Galilee Basin to host large coal deposits is evidenced by Linc Energy’s (ASX: LNC) project area in a similar basin margin stratigraphic setting, 120 kilometres to the east, with Indicated and Inferred Resources of thermal coal respectively of 161.4 million tonnes and 78.3 million tonnes.
 
To the south-east, on the eastern margin of the Galilee Basin, both Linc Energy and Waratah Coal have reported Inferred Resources of 326 million tonnes and 4.3 billion tonnes of thermal coal respectively.


Drilling

Baru Resources plans to conduct a first pass drilling program comprising seven drill holes to test the distribution and thickness of coal in two of the three potentially coal bearing basins that occur in the West Galilee Project Area.

A second drilling program of three drill holes targeting coking coal in the Millungera Basin will be conducted once EPCA2075 is granted.

Drilling will target the Winton formation within the Eromanga Basin. The Winton formation outcrops in the southern end of the project and is known to contain thermal quality coal in surrounding areas.

The Galilee Basin sub-crops to the north and west of the project area, and drilling will test those areas where the coal units are believed to be shallowest within EPC2078 and EPC2076.

Baru Resources is seeking to establish a low ash, high energy quality, coking coal project as a priority as well as pursuing a large quantity thermal coal target.

Negotiations regarding compensation agreements with local farmers are progressing and a field crew has been mobilised to site to confirm the final drill hole locations on the ground.

Drilling is expected to begin at the end of the wet season in early 2012 with the goal of defining a JORC Resource in 2012.

Meanwhile, Baru Resources has identified four additional exploration licences east of the town of Longreach targeting the same Winton Formation.

The Winton Formation within the licences is both outcropping and sub-cropping across the entire project area.


Infrastructure
 
Baru's West Galilee project area is intersected handily by the Mount Isa – Townsville Rail line (Eastern Rail Corridor). 

Potential ports include Townsville and Abbott Point. Feasibility studies are commencing for the Townsville port upgrade and the Abbot Point Coal Terminal is earmarked for expansion.
 
West Galilee is located 375 kilometres east of Mount Isa, and has the Mount Isa – Townsville rail line running through the project.

It straddles both a road and rail line that provides a potential link for West Galilee with the nearest coastal coal terminal at Abbot Point Terminal, which is 500 kilometres to the east.
 
Importantly, Guildford’s Hughenden project is located near Pentland and the main rail line to Townsville, and Guildford has signed agreements for a planned feasibility study to develop rail coal and export facilities from the Port of Townsville.