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Tiaro Coal Progressing PFS For T9 West Coal Project

Tiaro Coal (ASX:TCM) continues to progress plans to develop the coking-PCI coal mine in Queensland with its T9 West Project Pre-Feasibility Study now at the mine planning and economic analysis stage.

To help that end, Tiaro is raising funds through a share purchase plan that is currently expected to be priced at between $0.04 and $0.05 per share.

This is intended to progress its exploration activities and to provide working capital. It closes on Friday, 5 September 2014.

Data from two recent exploration programs have been interpreted and inputted into an updated geological model.

These consist of four open holes and one core hole as well as three large diameter drill holes that have confirmed coking coal properties for seams in the upper target sequence.

Xenith Consulting, who previously completed a review of the T9 West Area and prepared an Initial Mine Plan, will undertake these sections of the PFS.

T9 West currently has a total Resource of 87 million tonnes. In addition, a conceptual 200Mt to 300Mt Exploration Target has been estimated for the greater T9 - Shady Camp area located within Paragon Coal's EPC 956 and EPC 957.

Tiaro holds a 47.6% interest in Paragon Coal. China Qinfa Group and ICP Ltd hold 40.5% and 11.9% of Paragon.

The PFS is scheduled to be at completed by the end of 2014 at which stage Tiaro will be seeking funding to enable the T9 West Project to advance to Feasibility and Environmental Impact Study stage.

Share Purchase Plan

Tiaro is raising funds through a share purchase plan that is currently expected to be priced at between $0.04 and $0.05 per share.

This is intended to progress its exploration activities and to provide working capital. It closes on Friday, 5 September 2014.

Mine Plan

The original mine plan, which will be reviewed and assessed in the PFS, was for an open pit that uses trucks and excavators to access 19 near surface coal seams that exhibit a shallow to moderate dip across the T9 West project area.

The strip ratio has been defined at 5.5 bulk cubic metres of overburden to one tonne of Run of Mine coal.

Optimised pit design results in the conceptual recovery of 81 million tonnes of coal to support a 17 mine life at a rate of 5.5 million ROM or Run of Mine Tonnes per annum.

The bulk of finished product from plant processing is expected to be metallurgical quality with some thermal coal product.

T9 West

T9 West is located within the northern portion of EPC 956 in the lightly explored Maryborough Basin close to rail links, mining services and export facilities.

The 87 million tonne JORC resource defined at T9 West is contained within an area of 4 square kilometres and is made up of coking, PCI and energy style coals.

Resources defined from surface to a depth of 200 metres of open pittable coal include Measured Resources of 3 million tonnes, Indicated Resources of 14 million tonnes, and Inferred Resources of 51 million tonnes for a total of 68 million tonnes.

The balance of 19 million tonnes of the JORC resource is located at a depth of 200 to 300 metres and includes a Measured Resource of 1 million tonnes, Indicated Resource of 7 million tonnes, and Inferred Resource of 11 million tonnes.

The resource includes 19 coal seam groups that are open to the north and south and additional drilling will be required to increase the size of the resource along strike.

Recent short exploration programs were designed to test coal quality and resource extension.

Four open holes and one cored hole were drilled for a total of 1,287 metres and 274 metres of cored sections while three large diameter drill holes totalling 291 metres drilling were also drilled over the declared Resource area with 103 metres of core recovered.

The initial laboratory results from large diameter samples for seams in the upper target sequence have confirmed coking coal properties with volatiles in the mid 30s and vitrinite reflectance likely between 0.8 and 1.0.

Further results are anticipated for the mid sequence seams (targeting hard coking coal) and lower sequence seams (targeting low volatile coking and PCI coals).

Geotechnical logging was also undertaken on one selected drill hole.

In addition, Bob Leach Pty Ltd, an independent consultant metallurgist has reviewed coal quality data for the T9 West area and concluded that its coals have high vitrinite content and that the resource hosts a full range of metallurgical coal from hard coking coal through to semi soft coal and PCI or pulverised style coal.

Moderate sulphur levels of less than 0.6% and phosphorous levels of less than 0.6% have also been confirmed.

The conceptual exploration target of 200 - 300 million tonnes is based on evidence of coal seam sequence continuity across Shady Camp and may extend the potential strike length of coal resources to 9 kilometres, and adds an additional 20.8 square kilometres of tenement area for drilling and evaluation with a focus on coal production by open cut.

There is also a small extension to the south of T9 West that measures from 0.5 - 1.0 kilometre in strike distance that will be fully evaluated as part of the ongoing Preliminary Feasibility Study.

Analysis

Tiaro Coal is moving on to mine planning and economic analysis for its T9 West Project Pre-Feasibility Study after incorporating results from two recent exploration programs.

This progresses its plans to develop a viable coking-PCI coal mine in Queensland.

Besides the work carried out on the project, partner ICP Ltd had in July demonstrated its support for the company by acquiring 22.6 million shares, or a 19.9% stake, in the company.

T9 West had also earlier attracted an investment from China Qinfa Group - the largest non-state owned coal operator in China, which first invested $1.5 million in Paragon Coal before investing a further $3.6 million to study the feasibility of an open cut coal mine.

With this confidence, there is reason to believe that there should be significant take-up for the company's share purchase plan that closes this Friday.

Separately and adding value to Tiaro is its 30% interest in Guildford Coal's (ASX:GUF) Clyde Park Coal Project in the Galilee Basin, Queensland.

Guildford is currently in talks to sell all of its Australian coal assets to Singapore-listed Sino Construction Limited (SGX:F3V), highlighting the growing interest in coal.

We believe that Tiaro Coal presents investors a well-funded opportunity with upside potential to increase current resources and progress development of Paragon with strong JV partners.

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