Xceed Resources (ASX: XCD) has begun a diamond drilling program at the recently acquired Roodepoort thermal coal project, located in a major coal producing region in South Africa.
The project straddles Universal Coal's (ASX: UNV) 84 million tonne Roodekop thermal coal project and Exxaro Resources' (JSE: EXX) New Clyesdale colliery located in the centre of the Witbank coal field.
Roodeport covers 1,120 hectares and contains historic drilling that has identified near surface coal seams over half the property, and includes 5.6 metres on the #4 seam at a depth of 12 metres and 6.65 metres on the #2 seam at a depth of 25 metres.
Xceed Resources managing director Ian Culbert told Proactive Investors previously that Universal is drilling on the boundary to the Roodepoort project with coal known to extend into the licence, as has been proven with drilling by Xceed.
"I know that we're looking at something not dissimilar to Roodekop in terms of a mixture of export quality coal and domestic coal and it will be an open cut operation," he said.
A total of 20 diamond holes, with an average depth of 35 metres for each hole, for a total of 700 metres are planned to be completed during February and March.
The drilling program will test the extent of coal mineralisation on the Roodepoort and adjacent Diepspruit properties.
Recent drilling by Xceed as part of due diligence on the project has confirmed the presence of near surface, high grade coal which will now become the focus of further drilling campaigns aimed at resource definition.
The area tested by the due diligence drilling is in the eastern half of the project area, adjacent to the Roodekop project, suggesting that there is a continuation of the same coal formations from the one project to the next.
The company is aiming to complete resource modelling by the end of March or early April.
During the December 2011 quarter Xceed executed definitive agreements with Hampfuna Mining & Exploration to acquire the right to purchase a 70% equity interest in each of the Roodepoort and Bankfontein coal projects.
Xceed will settle the deal through a combination of project development expenditure and vendor payments to be made when certain milestones - namely, resource definition, mining rights and the start of mining - are achieved.