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Stratum Metals targets Canning Basin thermal coal after securing Heritage Protection Agreements

Stratum Metals (ASX: SXT) has finalised the Heritage Protection Agreement for two tenements in the Kimberley Region of Western Australia.

Stratum’s coal interests are held in an 80/20 joint venture with State Resources at the Canning Basin Coal Project, less than 20 kilometres from Rey Resources (ASX: REY) Duchess Paradise Project which hosts an Inferred Resource of 535 million tonnes of coal.

The Heritage Protection Agreement was finalised between Stratum, State Resources and the Kimberly Land Council on behalf of the Nyikina Mangala group.

Stratum managing director Martin Holland told Proactive Investors today that the company was in discussions with the Kimberly Land Council for 12 months to finalise the agreement.

“Stratum wants to build quite a strong relationship with the native group, help build a strong alliance as well and also support the community up there as much as we possibly can,” Holland said.

Now that an agreement has been reached, the Kimberley Land Council is taking the necessary steps to lift its objection with the National Native Title Tribunal.

The objection is scheduled to be lifted on February 1, 2012.

Thermal coal exploration

With the Heritage Protection Agreement finalised, Stratum is able to progress with exploration at the highly prospective thermal coal project, something Holland said was a “massive move” for the company.

A team of geologists has been appointed to undertake an extensive desktop study on the coal prospective tenements.

“We’ll go through all the previous historic data, check out the region as a whole, get more of an understanding of the region and then also put together a detailed exploration campaign based on our geologists,” Holland said.

Data from this study will be available in coming weeks.

Stratum is planning to spend $250,000 on exploration in fulfilment of its obligations to obtain a 60% interest in this tenement and, subject to positive results, an additional $750,000 on exploration in the second year to obtain an 80% interest.

The company is in discussions with major parties, some of which approached Stratum directly, in order to fast track the road to exploration.

Canning Basin coal

Located about 150 kilometres southwest of Derby in the Kimberley, the Canning Basin is the largest onshore sedimentary basin in Western Australia.

The emerging coal province features outcrop from the prospective coal bearing Lightjack Formation, mapped by the Geological Survey of Western Australia.

Previous exploration in the area was carried out by Rio Tinto (ASX: RIO), with the large Canning Coal Project, part of which overlaps Stratum’s current project area.

Stratum’s tenements are located close to transport infrastructure, with road access to the tenements.

Indian coal demand

Significantly, Stratum has a potentially major market for its thermal coal project close at hand in India, where demand for coal to fuel high economic growth and development is insatiable.

“The project is highly prospective for thermal coal, it’s a very interesting area being quite close to port, and that port being the closest port in Australia to India, it makes it a very attractive option for the Indian companies,” Holland told Proactive Investors.

By 2016, it is estimated that India will require over 1 billion tonnes of coal, a shortfall of 300 million tonnes it cannot produce.

“This leaves us in a very strong position having a very strategic land holding in the Canning Basin which is highly prospective for that commodity.”