Bowen Coking Coal (ASX: BCB) has boosted it exploration target for its Mt Hillalong metallurgical (coking) coal asset after a comprehensive review of historic exploration data revealed open pit and underground potential.
Located near Rio Tinto’s open cut Hail Creek mine (subject to a Glencore transaction) in Queensland’s Bowen Basin, the Mt Hillalong project also includes the Hillalong East tenements recently acquired from Rio Tinto Exploration.
Xstract Mining Consultants consolidated historic exploration data across the Mt Hillalong and Hillalong East tenements and created a geological model and a clear exploration pathway to advance the project.
The review comprised data from three 2D seismic lines, drilling, and ground and aeromagnetic surveys including Rio Tinto’s exploration information between 2013 and 2015.
After its review, Xstract advised Bowen Coking Coal an exploration target up to 409 million tonnes for coking coal and Low Vol PCI. The consultant claims the lower end of that target would be 61Mt.
The exploration target includes the Rangal and Moranbah coal measures and estimates initial open pit ranges for both zones. Additionally, the estimate includes underground potential for both measures beyond the open pit target up to 500m depth.
“The open cut areas are now confirmed as a priority for Mt Hillalong and we look forward to exploring these areas further for its obvious benefits in terms of high quality coal and potential for lower development costs typically associated with open cut projects,” Bowen Coking Coal managing director Gerhard Redelinghuys said.
The review assumes a high quality coking coal, with a low volatile PCI for the exploration target
In order to firm up a JORC-compliant resource, Bowen Coking Coal plans to drill up to five holes within the next 12 months.
According to Mr Redelinghuys, the metallurgical coal markets remain strong on the back of Asian demand for the steel fuel. Coal is now foreseen to pass iron ore in the 2018/19 year as Australia’s highest export earner.
Additionally, he noted that high US dollar prices linked with the weaker Australian dollar have created significant margins for Australian producers and revived investor interest in the scarce commodity.
Comet Ridge sale
As part of its strategy to fast-track the Mt Hillalong and Cooroorah metallurgical coal projects, Bowen Coking Coal reported in late May it plans to divest Comet Ridge to Springsure Creek Coal.
Bowen Coking Coal plans to retain a free-on-rail 1.25% royalty on the first 2.8 million tonnes of coal produced from the operation as well as an option to acquire all coal produced from Comet Ridge However, Springsure retains the right to purchase the royalty for A$3 million.
According to Bowen Coking Coal, the disposal allows the project to be fast-tracked and will bring in royalty revenue to put towards advancing its primary assets.