Bowen Coking Coal is one of the ASX's only coking coal pure-plays. Pic Getty
Bowen Coking Coal gets cracking on resource upgrade at Cooroorah
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Bowen Coking Coal has kicked off drilling at its Cooroorah project in Queensland’s Bowen Basin, seeking to increase the site’s current resource.
The Bowen Basin, a 60,000 sq km area in central Queensland, hosts Australia’s biggest coal reserves and virtually all of the known mineable prime coking coal, according to the Bowen Basin Underground Geotechnical Society.
Coking coal is vital in steel production — and global crude steel production is at its highest levels since 2012, due largely to China’s focus on infrastructure and housing.
Good outlook
The outlook for the Cooroorah project is good given it hosts the same type of coal structure — known as the Rangal coal measures — mined at neighbouring Wesfarmers’ Curragh mine (see map below).
The Rangal coal measures are extensively mined throughout the Bowen Basin to supply high quality coking, pulverised coal injection (PCI) and thermal coal for the seaborne market.
PCI is a method for improving the performance of a blast furnace used for smelting to produce industrial metals and alloys, generally iron, but also others such as lead or copper.
Initial quality analysis undertaken on the coal seams that lie within the Cooroorah project indicate the potential for Bowen Coking Coal to wash a hard coking coal product as well as a secondary thermal coal or PCI product at high yields.
The project hosts a resource of 125 million tonnes, of which 70 million tonnes is in the higher confidence “indicated” category and 55 million tonnes is in the “inferred” category.
“We want to increase the confidence of the resource and it will most likely result in the re-definition of the JORC resource,” CEO Gerhard Redelinghuys said.
JORC compliance refers to the mining industry’s code for reporting exploration results, mineral resources and ore reserves, managed by the Australasian Joint Ore Reserves Committee.
“In other words, if the program is successful, there are some ‘inferred’ tonnes which might move to ‘indicated’ and there might even be some more ‘inferred’ tonnes as well.”
Mineral resources are categorised in order of increasing geological confidence as inferred, indicated or measured. By moving resources into the indicated category, it means a company has sufficient information on geology and continuity to support mine planning.
Reports in two weeks
The maiden drilling program will comprise two HQ core holes targeting four seams. The program will also allow Bowen to conduct further quality and washability tests to support future studies.
Weather permitting, Bowen Coking Coal estimates it will report on the seam intersects within the next two weeks and will most likely have the coal quality results from the drilling program by late January.
Investors will be watching the company closely given there are not many Australian players looking for coking coal in their own backyard.
“Coking coal prices are up and there’s not a lot of pure Australian coking coal exploration companies on the ASX,” Mr Redelinghuys said.
“So we expect significant interest in the outcome, especially, given the company only has an EV [enterprise value] of $6 million.”
Australia is the largest supplier of seaborne coking coal in the world and the country has a big advantage being located close to large consumers such as Japan, India and China.
“We see that as a big benefit for Australian coking coal because we’ve basically got the lowest freight costs to those markets,” Mr Redelinghuys said.
“The lowest distribution cost, linked to the high quality of Australian coking coal really makes a compelling business case.”
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