542% Resource Increase in CMR’s Flagship Dawson West

In partnership with the ASF Group Limited (ASX: AFA), CMR are pleased to announce their substantial uplift coal resource discovered on their wholly owned Queensland coal project – Dawson West (EPC 2427 & 2426)

CMR has identified a new coal precinct that is located 40kms southwest of the township of Moura and close to coal rail infrastructure that links to coal terminals at the Gladstone Port region in central Queensland;

Exploration has defined a substantial coal resource within the Triassic Moolayember Formation within the Bowen Basin, that ranges from surface to 500 metres;

The deposit contains a JORC Code Resource potentially suitable for longwall, shortwall and linear style mining in multiple seams from 0.8 – 3.5 metres thick at depths from 5 – 487 metres;
Coal quality shows export grade thermal product in the J0 and M, M1, M0 coal seam intersections, with low sulfur content, washed ash of < 7% (adb) and > 6700 kcal energy (adb);

CMR has defined a JORC (2012) code compliant resource, with a total of 645Mt (129Mt Indicated and 516Mt Inferred), which was derived from exploration conducted over only 8% of the Project area;

An MDL Application has been lodged by CMR after a successful 2014 initial drilling programme;
Cumulative coal thickness in the sequence is approximately 17 metres across 17 significant seams intersected: F, G, H, [J1, J1B & J1A], J0, K, L, M, [M1 & M0], N, O, P, R, V, W, X, Y;
Exploration to date shows un-faulted, flat structure, dips ranging from 1-3 degrees with no indication of coal seam gas;

JORC Code Resources extend across the entire 112km2 explored area, which comprises 8% of the Project area of 1,436km2;

Successful completion of 28 boreholes with a total of 7568m drilled, geophysically logged, selectively cored and sampled;

Scope for significant increases in tonnage exists across substantial unexplored areas with an exploration target of 2 Billion tonnes (Bt). The extent of the coal-bearing sequence on the tenement is >60km east-west and >35km north-south.

9 October 2014: CMR Coal (“CMR” or “the Company”) is pleased to announce an upgrade from the initial 119Mt resource to645Mt JORC (2012) Code Compliant Resource of export quality thermal coal at its flagship Dawson West Project, which contains an Indicated Resource of129Mt and Inferred Resource of 516Mt.

CMR’s Dawson West Project is located 40km southwest of Moura coal rail infrastructure, which links to the coal terminals at the Port of Gladstone.

Resource Overview

Following completion of the September 2014 initial exploration programme at Dawson West, the geological drilling (chip and core), geophysical logging, seismic and sampling data obtained has been interpreted, compiled and loaded into the Company’s database, and geologically grid modelled with Minex Software (Figure 3,Figure 4 & Figure 9). Coal core was used to confirm signatures identifying coal intersections and rock-type signatures in the chip-hole geophysical logging profiles.

Coal Resources were calculated using a default density of 1.40 multiplied by the modelled coal volumes to determine tonnages. Valid seams contributing to Resources were determined by criteria including seam continuity, thickness over 0.8m, and limits for depth of weathering and areal extent (Figure 6, Figure 7,Figure 8&Figure 9). The JORC Code Indicated Resources areal envelope extends outwards to a distance of 1000m from drillholes containing continuous seams, and similarly for Inferred category, to a distance of 2500 metres (Figure 2,Figure 5, Table 1&Table 4). Coal quality is high-volatile export-grade thermal determined from analysis of seams cored at 5 sites (Figure 4, Figure 10 & Figure 11).

Table 1. Summary of estimated JORC Code (2012) Indicated and Inferred Resource for EPC 2427

FORMATION JORC CODE (2012) RESOURCES (Mt)
Moolayember Indicated 129
Inferred 516
TOTAL 645
Coal Quality

Particularly encouraging in the initial coal analyses is the banded bright coal character with low ash, low sulfur and indications of swell. Raw Coal Quality was in-line with expectations and it is anticipated that the final product specification (as received) will deliver high yield over 50% while producing a 7.0% ash product with an acceptable energy content of over 6,400 k/cal and low sulfur levels of under 0.5% (Table 2 & Table 3).

A&B Mylec Pty Ltd has managed the coal quality process with ALS laboratories and has provided the following commentary:

“Exploration drilling for CMR’s Dawson West Coal Project has commenced, the first HQ borecore has completed analysis at the ALS Coal Richlands laboratory with a further four borecores currently being analysed . Results to date indicate that the Dawson West deposit is a high volatile bituminous coal which would make a thermal coal suitable for the export market.

The five ‘M’ seam borecores sampled to date have ply ashes ranging from 7.9% to 43.3 %ad, with the entire seam raw ash being 20.7 %ad. Full washability testing is currently in progress; however a cut-point product sample generated by Float/Sink at a low specific gravity of 1.35 suggests that a product representative of typical Hunter Valley and Gunnedah Basin thermal coals can be achieved at a yield over 50%. Product yields would naturally increase with corresponding rises in product ash. The limited data to date indicates that the Dawson West product would meet typical Newcastle export thermal coal Calorific Value GAR and GAD benchmark specification, which presently trades at around US$73.86 per metric ton FOB. All coal quality parameters including total sulfur, chlorine and HGI lie within desired quality ranges. The project is in the early stages of exploration, with laboratory analysis still in progress. Results to date should be considered indicative, pending a full resource coal quality evaluation at completion of this exploration phase.

The two ‘J’ seam borecores were sampled as three plies each, with ply ashes ranging from 10.9% to 22.4 %ad, with the entire seam raw ash being 21.3%ad. Full washability testing is currently in progress; however a cut-point product sample generated by Float/Sink at a low specific gravity of 1.35 suggests that a product representative of typical Hunter Valley and Gunnedah Basin thermal coals can be achieved at a yield over 60%. Product yields would naturally increase with corresponding rises in product ash. The limited data to date indicates that the Dawson West product would meet typical Newcastle export thermal coal Calorific Value GAR and GAD benchmark specification, which presently trades at around US$73.86 per metric ton FOB. All coal quality parameters including total sulfur, chlorine and HGI lie within desired quality ranges. The project is in the early stages of exploration, with laboratory analysis still in progress. Results to date should be considered indicative, pending a full resource coal quality evaluation at completion of this exploration phase.

Coal classification, product options and coal utilisation potential will be further assessed as more data from the drilling programme becomes available.”

A&B Mylec is a consulting team of experienced professionals that has been providing metallurgical, process engineering and coal technology expertise and solutions to the Australian and International coal mining industry for nearly 20 years. Services span the earliest stages of mine site exploration, development and evaluation, incorporating all stages of project investigation and feasibility, through to detailed process design, implementation, market definition and support. Apart from serving major international mining companies through to junior exploration companies in the Australian coal mining industry, A&B Mylec also undertakes metallurgical and coal quality evaluation work in South Africa, Mozambique, Botswana, Mongolia, Russia, Indonesia, Canada, Colombia and the USA.

CMR’s Managing Director, Nicholas Williams commented:

“This is a huge discovery for CMR and the State of Queensland as we have identified a new coal precinct that is close to Infrastructure and is only 233km from the Gladstone Port region”.

“The second phase drilling campaign has been a great success, increasing our resource confidence into the Indicated category and overall Inferred Resource significantly from the initial exploration program”.

Mr Williams added, “CMR has only explored 8% of the total project area and the project has immense scope for significant increased tonnages across the existing unexplored areas”.

“CMR will launch into a pre-feasibility study in the coming months to look into potential mining methods, transportation options and the overall economics of the project”.

“From our recent success, CMR is looking into options to further advance the Dawson West Project and will be running a process to find a development partner and will be short listing candidates in the interim”.

“CMR is committed on maintaining low exploration costs, to take advantage of the current cyclical low-point by optimising exploration at a point where the supply of equipment and human resources is available at significant discounts to previous pricing”.

Dawson West Project Overview

The Dawson West Project is a significant new export thermal coal deposit located in an historically low-cost mining region (Figure 1). Coal-bearing strata with multiple seams occur across on EPC 2427 and extend >60km east-west and >35km north south, depths range from surface to >485 metres. Multiple seams have been intersected in the Moolayember Formation in every drillhole. Drilling is initially openhole chip logged, and then cored sections are taken from seams of significance. Coal cores undergo pre-treatment to determine potential sizing and handling characteristics, and then through a combination of analyses to determine the coal character and washability characteristics that determine potential products. The Dawson West Project has a JORC Code Resource of 645Mt of which 129Mt is in the Indicated category. Coal is export quality thermal high volatile bituminous type.

Dawson West Exploration Strategy

Exploration is continuing at Dawson West, with targeted drilling phases to expand JORC Code compliant coal resources. Coal analysis that is comprehensive will continue to characterise the product and mineability aspects. Initial drilling has focused on the northern areas as these are closer to existing infrastructure and rail, and this will expand into unexplored areas.

To date 28 drillholes have been completed, and successfully delineated JORC Code compliant Inferred and Indicated Resources. CMR will commence a feasibility study on completion of current exploration to assess appropriate mining methods that maximise safe and economic extraction.

Compliance Statement

The information in the report that relates to Exploration Results and Mineral Resources is based on information compiled by Dr Guy LeBlanc Smith and Aaron Donelan: both are Competent Persons and respectively Members of The Australian Institute of Geoscientists (AIG Member No 3278) and Australian Institute of Mining and Metallurgy (AusIMM Member No 110065).

Dr LeBlanc Smith is the sole director of Director Rock Knowledge Services Pty Ltd (RKS). Aaron Donelan is a full-time employee of Coal Resource Consulting Pty Ltd (CRC).

Dr LeBlanc Smith and Aaron Donelan are qualified geologists who have sufficient experience (35+ years and 20 years respectively) that is relevant to the style of mineralisation and type of deposit under consideration and to the activity being undertaken to qualify as a Competent Person as defined in the 2012 Edition of the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Dr LeBlanc Smith and Aaron Donelan consent to the inclusion in the report of the matters based on his information in the form and context in which it appears.

ABOUT CMR COAL

Civil & Mining Resources Pty Ltd, trading as CMR Coal (CMR) is a privately owned coal exploration company with 25 EPC(A)’s, totalling 13,540km2 of land throughout Queensland’s major coal bearing basins. CMR’s tenements are situated in close proximity to operating mines, infrastructure and coal exploration areas that have the potential to yield economically viable coal deposits.

For further information please contact:

Nicholas Williams

Managing Director

P +61 7 3137 0081

E n.williams@cmrcoal.com.au