ACN 081 244 395 COLTON COAL PTY LTD ACN 140 768 636 COLTON MINE PROJECT MINING LEASE APPLICATIONS COLTON A, COLTON B and COLTON C over Prospecting Permits 50818, 50819, 50820, 50821, 50822 and 50823 And EPC 923 and EPC 1082 AMENDED INITIAL DEVELOPMENT PLAN or IDP 1 PART 15.3 OF THE APPLICATION S 318DT of the Mineral Resources Act 1989 Ss 318DT, 318DU, 318DV and 318DW of the Mineral Resources Act 1989 (Qld) 1 This document contains only the Initial Development Plan required under s 318DT of the Mineral Resources Act 1989 (Qld) and also addresses certain requirements of sections 318DU, 318DV and 318DW of the Mineral Resources Act 1989. It does not provide for the CSG Statement or CSG Assessment Criteria, which are subject to a different set of rules and are located in part 15.3B of this application.
Transcript
ACN 081 244 395
COLTON COAL PTY LTD ACN 140 768 636
COLTON MINE PROJECT
MINING LEASE APPLICATIONS
COLTON A, COLTON B and COLTON C
over Prospecting Permits
50818, 50819, 50820, 50821, 50822 and 50823
And EPC 923 and EPC 1082
AMENDED INITIAL DEVELOPMENT PLAN or IDP1
PART 15.3 OF THE APPLICATION
S 318DT of the Mineral Resources Act 1989
Ss 318DT, 318DU, 318DV and 318DW of the Mineral Resources Act 1989 (Qld)
1 This document contains only the Initial Development Plan required under s 318DT of the Mineral Resources Act 1989 (Qld)and also addresses certain requirements of sections 318DU, 318DV and 318DW of the Mineral Resources Act 1989. It doesnot provide for the CSG Statement or CSG Assessment Criteria, which are subject to a different set of rules and are located inpart 15.3B of this application.
CHECKLIST OF LEGISLATIVE REQUIREMENTS
Document Section (MRAct)
Requirement Section ref
InitialDevelopmentPlan
318DT(1)(a) an overview of the activities proposed to be carried outunder the proposed mining lease during all of its proposedterm
1.1
318DT(1)(b) for each year of the plan period:
the nature and extent of activities to be carried outunder the proposed mining lease during the year;and
where the activities are proposed to be carried out
1.2
318DT(1)(c)for each mineral the applicant proposed to mine under theproposed mining lease, each of the following:
the location and estimate of the resources of themineral in the area, or proposed area, of the mininglease
2
the standards and procedures used to make theestimate
3
the rate and amount of the proposed mining4
approximately when the proposed mining is to start5.1
a schedule for the proposed mining during the planperiod
5.2
318DT(1)(d) maps that show the matters mentioned in paragraphs(b) and (c)(i), (iii) and (iv)
1.2
318DT(1)(e) any other information relevant to the criteria mentioned ins 318EF
for matters relevantto the CSGstatement andCSG assessmentcriteria see part15..3B of thisapplication
318DT(1)(f) reasons why the plan is considered appropriate 6
318DT(1)(g) another matter prescribed under a regulation none identified
218DU state the period of the proposed plan 1.1
318DV statement of how the effects on, and the interests of, anyrelevant overlapping or adjacent petroleum tenure holderhave, or have not, been considered having regard to:
the main purposes of this part; and
the CSG assessment criteria, other than the initialdevelopment plan requirements
7
318DW requirement that the activities provided for under theproposed plan must seek to optimise the use of incidentalcoal seam gas in a safe and efficient way if it iscommercially and technically feasible to do so
8
Nb: In this part of this mining lease application, MR Act means Mineral Resources Act 1989 (Qld).
1. Overview of the activities proposed to be carried out
1.1 Overview
This section addresses s 318DT(1)(a) and (b) of the MR Act
Colton Coal Pty Ltd ACN 140 768 636 (Colton Coal) is making three contiguous mining lease
applications (MLAs) for the Colton Mine Project (Project) that this Amended Initial
Development Plan (IDP) describes. The MLAs cover Parcel Prospecting Permits (PPs)
numbers 50818, 50819, 50820, 50821, 50822 and 59823 and 50847. These MLAs are each
an application for a mining lease under section 234(1) of the Mineral Resources Act 1989
(Qld) (MR Act). These MLAs are to provide for mine excavation, coal processing and
infrastructure for the Project. The MLAs cover a combined area of 1,025.1 hectares (ha).
The term of this IDP is proposed as two years from the date of grant of the Project MLAs on
the assumption that all of the Project MLAs will be granted from a common date. Notionally,
the term is from 1 October, 2012 to 31 November 2014 to allow for site preparation,
construction of infrastructure and commencement of production operations at the Project.
The Project is located in the Fraser Coast Regional Council area in southern Queensland,
approximately 10 km north of Maryborough and 300 km north of Brisbane. Access to the
project area is via the Churchill Mine Road from the Torbanlea to Pialba Road, and from the
Bruce Highway - see Figure 1.
The Project consists of the development of a ~16.8 Million tonne (Mt) indicated and inferred
Resource of coking coal within the Burrum Coal Measures in the Maryborough Basin. The
Project is planned to mine up to 1.1 Mt of Run of Mine (ROM) coal per annum (pa) by open
cut methods to produce on average 0.5 Mtpa of product coal for export. Project production life
is anticipated to be 8 -10 years based on current economic assessment of the resource.
However, continuing exploration success should extend the known resource and hence the
duration of the Project.
The mining leases term applied for is twenty (20) years, to allow for construction time prior to
commencing production activities, potential extension of the mining activities as resources
information is refined and allowance for close down and final rehabilitation of the site at the
end of mining. Colton Coal anticipates that the activities described in sections 1.1 and 1.2 will
continue to be carried out over the entire term of the mining lease.
The target commencement date for start of overburden removal is subject to the grant of the
mining leases and environmental authority for the Project. The start of coal production
operations is also dependent on the availability of services and infrastructure for the Project
and for coal transportation to port. The Project construction period on site prior to start of coal
production is anticipated to be 6 – 9 months with first railings expected in mid 2013 (based on
grant of the mining lease in October 2012).
The Project will involve open cut mining using truck and excavator methods. Topsoil stripped
prior to mining will be stockpiled for later use in rehabilitation. Overburden will be relocated
from above the coal seams to in-pit dumps, and in out-of-pit spoil dumps located on site and
contiguous with the pit excavations.
A coal handling and preparation plant (CHPP) and associated mine infrastructure –
workshops, offices, train loading and rail balloon loop and waste storage areas - will be
required for the Project. Processing will involve crushing, screening and washing to separate
coal from waste materials. Waste rejects will be de-watered, with water recycled to the
processing plant and solids disposed of within specially constructed storage areas and in spoil
dumps.
Product coal will be transported by rail from the Project to Gladstone Port along Queensland
Rail Network’s North Coast Line where it will initially be exported through the Barney Point
Coal Terminal and later through the Wiggins Island Coal Terminal once capacity at that
terminal becomes available to the Project.
Figure 1: Colton Project Location and Mining Tenements
During construction and then at full production the Project is estimated to provide employment
for up to 100 full time employees with flow on effects to another 80 - 100 positions.
Of the three MLAs which comprise the Project one MLA (referred to as "Colton A") is over
granted Authority to Prospect (ATP) 613 which impacts on the southern part of the Project
area. The second MLA (referred to as "Colton B") is over ATP Application 733 which impacts
on the northern part of the Project area. The third MLA (referred to as “Colton C”) is also
over ATP613. This IDP describes the Project in total given that it sits across the three MLAs.
See Figure 2 and section 7 of this IDP for details of the overlapping petroleum tenures.
Figure 2: Colton Project Mining and Petroleum Tenures
Project Proponent
Colton Coal is the Project proponent. Colton Coal is a wholly owned subsidiary of Northern
Energy Corporation Limited ABN 90 081 244 395 (NEC), which is in turn a wholly owned
subsidiary of New Hope Corporation Limited ABN 38 010 653 844 (NHC). NHC is a
Queensland based coal exploration, project development and coal mining company listed on
the Australian Stock Exchange – ASX Company Code - NHC. NEC was a publically listed
company that was taken over by NHC in February 2011 and fully absorbed in November
2011.
At the time of making the mining lease aplicationa and lodgeing the first initial development
Plan NEC’s office is located at:
Level 5
60 Edward Street
Brisbane, Qld.
GPO Box 5283
Phone: (61) 7 3303 0695
Facsimile: (61) 7 3303 0601
Website: www.northernenergy.com.au
As of 27 January, 2012, NEC’s – read Colton Coal – office was located at
Level 6
316 Adelaide Street
Brisbane, Qld.
Phone: (61) 7 3014 6437
Facsimile: (61) 7 3014 6409
Website: www.northernerergy.com.au
Taroom Coal Proprietary Limited ACN 079 251 442 (Taroom Coal) is also a wholly owned
subsidiary of NEC. NEC is the manager of and the responsible entity for all business activity
carried out on and in connection with Taroom Coal's tenures. The Project area is within the
area of Exploration Permit Coal (EPC) 923 and EPC 1082 both held by Taroom Coal.
Project Tenements
Summary details of the Colton Coals PPs are shown in Table 1 following and with reference to
50818 Lot 31 SP104950 Queensland Rail C/- Facilities Manager
PO Box 198, Rockhampton, Q 4700
50819 Lot 14 USL 34733 State of Queensland Dept Environment & Resource Management
Po Box 212, Maryborough. Q 4650
50820 Lot 1 USL 34852 State of Queensland As for Lot 14 USL 34733
50821 Road # 62 State of Queensland As for Lot 14 USL 34733
50822 Lot 7 USL 34860 State of Queensland As for Lot 14 USL 34733
50823 Lot 1 AP6551 State of Queensland As for Lot 14 USL 34733
Colton Coal's PPs numbers 50818, 50819, 50820, 50821, 59822 and 59823 overlap with
Taroom Coal's EPC 923 and in the case of PP 50819 with Taroom Coal's EPC 1082 as well.
Both EPC 923 and 1082 have subsequent to the making of the mining lease applications
been transferred to Colton Coal. Therefore at the time of making this Amended initial
Development Plan Colton Coal holds the following exploration tenements associated with the
Project:
the PPs listed above;
EPC 923; and
EPC 1082.
EPC 923 was first granted to Taroom Coal from October 2005 and was renewed after
relinquishment in October 2008 for a further 5 years. On renewal the tenure contained 64
exploration sub blocks. EPC 1082 was granted to Taroom Coal in November 2007 for 3
years. It contains 3 sub blocks. EPC1082 was renewed in November 2010 for a further 2
years.
Colton Coal's exploration tenures overlap with oil and gas exploration tenures Authority to
Prospect 613 (ATP 613) and ATP applications (ATPA) 733 and ATPA 674, all registered to
Magellan Petroleum (Eastern) Pty Ltd (Magellan). Magellan has a Farm-in Agreement with
Eureka Petroleum Pty Ltd (Eureka), a wholly owned subsidiary of Blue Energy Limited (Blue
Energy) under which Eureka can earn a 75% interest in the tenures on completion of a Native
Title Agreement process. ATP 613 was granted on 23 March, 1995 for a term to 31 March,
2019. NEC has initiated discussions with Blue Energy towards making a co-development
agreement. Colton Coal wishes to negotiate a co-development agreement that provides for
efficient and expedited processes under which the parties may each beneficially utilise their
respective tenements. As noted above the Project comprises at this stage two contiguous
MLAs - one overlapping with ATP 613 and another overlapping with ATPA 733.
1.2 Description of proposed activities
This section also addresses s 318DT(1)(b) of the MR Act
The construction of the mining operation and the CHPP, stockpiling and transportation
facilities, maintenance workshops and servicing plant and administration buildings within the
Colton A, Colton B and Colton C MLA areas are all part of the proposal to develop the Project.
The main elements of the proposed development to be constructed and operated are:
Open pit coal mining excavations;
Haul road from mine area and ROM coal receival area and stockpile;
ROM dump hopper and primary sizing station;
Secondary sizing station and linking conveyors;
Coal processing plant comprising a single module of 350tph capacity;
Product coal conveyors and stockpile;
Train loading area;
Rail balloon loop and reconstruction of part of the old Pialba Rail Corridor track;
Plant reject material storage areas;
Heavy equipment workshop and vehicle servicing areas;
Warehouse;
Administration building and change rooms;
Fuel, lubricants and tyre stores;
Light and heavy vehicle parking hard stands;
Access roads;
Raw water storage and water management dams and pipelines; and
Electrical power generation, substation and distribution network.
The general layout of the main infrastructure is shown in Figure 3. As currently planned
mining activities are planned predominantly within the Colton A MLA area with some of the
coal processing and related tasks including train loading located within the Colton B MLA
area. Mining activities are also a possibility within the Colton B area at a later stage if/when
mining commences on the north side of the rail corridor.
Figure 3: Project Major Infrastructure General Layout (Colton MLA areas)
The following table outlines the nature and extent of the activities proposed to be carried out,
including the proposed location of activities during the term of this IDP.
Table 1: Nature and Extent of Activities
Nature and Extent of Activities Location of ActivitiesYear 1 Construction and Production See figure 3 for Industrial AreaYear 2 Production See figure 4 for mine excavation outline at
end year 2
Figure 4 - Mine Excavation and Spoil Areas at end of year 2
2. Location and estimate of the resources in the area of the ML
This section addresses section 318DT(1)(c)(i) of the MR Act
2.1 Location and estimate
NEC for Taroom Coal/Colton Coal had undertaken exploration programs within EPC
923 since it was granted in December, 2006. This work has comprised a review of
regional geological information and information available on public record from
extensive exploration carried out by the Queensland Government in the area as well as
its own field exploration programs.
Data from the Queensland government drilled boreholes (NS series) has been
subject to several campaigns of validation including twinning of holes, re-survey of
remaining collar markers and desktop validation of drill hole logs and coal quality
data. NS series holes were given a confidence classification based on several
criteria including location, quality and completeness of logging, core recovery and
appropriateness of sampling techniques. Applying the confidence classification
allowed a substantial number of the NS series holes to be included in the geological
model with some being included as points of observation for resource classification
purposes.
NEC has been continually drilling at the Colton Project since late 2010. The purpose of
the drilling has been to improve confidence in the coal quality and structural continuity of
the known coal seams. This additional data has enabled the classification of indicated
resources over the majority of the deposit within the MLAs.
In order to prove structural continuity for resource estimation, both core holes and open
holes with geophysics have been used as points of observation. In order to prove coal
quality continuity, only core holes with analysed seam intersections have been used as
points of observation.
The validation techniques applied to the NS series holes have also been applied to the
NEC drilled holes. All boreholes had to meet the validation criteria prior to being
incorporated into geological model.
The following drill hole spacing has been used to define both the structural and coal
quality continuity of coal seams at the Project:
Inferred Resource - Points of Observation up to 800 m apart, and not more
than 200 m beyond the last line of points of observation.
Indicated Resource - Points of Observation up to 400 m apart, and not more
than 200 m beyond the last line of points of observation.
The relatively small distance chosen for the Project is a reflection of the lenticular
nature of the seams, and uncertainty in the continuity of seams away from points of
observation.
Only seams in the stratigraphic sequence down to, and including, the B sequence have
been considered for resource estimation. This excludes the C and D seam groups,
which have been intersected by drilling but are considered too thin and too deep to be
mined economically. A maximum depth cut-off of 150m has been applied to the resource
although detailed mine planning and current economic modelling has shown that the
excavation may extend to depths beyond this.
Table 2, provides the latest resource estimate within the boundary of the MLA’s.
Table 2: Colton Project Resources
SEAM GROUP INDICATED (Mt) INFERRED (Mt) TOTAL (Mt)
CHURCHILL 1.3 2 3
GLOBE 0.9 2 3
ELLENGOWAN 0.6 1 1
E1 <0.1 <1 <1
E2 0.4 <1 1
E3 0.3 <1 <1
JUBILEE 0.9 1 2
A1 1.1 <1 1
A2 2.4 1 3
A3 1.8 1 2
B 2 2
TOTAL* 9.6 9 18.6
*totals may not compute due to rounding
Figure 5: Current Resource Limits
3. Standards and procedures used to make the estimate
This section addresses section 318DT(1)(c)(ii) of the MR Act
For the purpose of resource modelling, Mincom’s GDB has been used as the geological
database for the Project. Validation procedures are rigorous, ensuring that erroneous
data has not been loaded to the database. Interrogation procedures and graphical
output are designed specifically for coal deposits. GDB links seamlessly into
Stratmodel, Mincom’s stratigraphic modelling system. This minimises any potential for
creation of errors in the transfer of data from the database to the modelling software.
A stratigraphic column of the modelled seams is given as figure 6. The modelling rules
used to create the structural model are listed in Table 3. The seam structure has been
defined in terms of seam groups, parent seams and seam splits, as recorded in the drill
holes. Modelling has been performed on a compound unit basis – that is, seam groups,
parent seams and their splits have all been modelled.
The geological database currently holds data for 672 drill holes. This includes all available drill hole data
within EPC923 and EPC1082 of which the three MLAs are within. Of the 672 drill holes, 432 have been
deemed valid. Of the 432 valid drill holes, 183 are within the MLA area. The MLA area for the purpose of
database maintenance and geological modelling is defined in table 4.
Table 4: Limits of Colton MLA database selection set
Minimum Maximum
Easting 464112 470373
Northing 7185399 7190076
The geological database contains Drill Hole Collar, Sedimentary Lithology, coal quality data (raw coal,
washability and product composite) and Downhole Geophysics data. This data has been used for ongoing
correlation work. All holes drilled by NEC since 2006 have been given the prefix NMB, whilst historical
data has been given the prefix NS.
Table 5 below shows summary statistics of drill hole intersections used in the Colton model. Note that in
the area which has been modelled, not all of the seams known to occur in the Maryborough Basin have
been intersected.
Table 5: Drill Hole Intersections (NMB and NS holes) in the Colton Project AreaSe
am
Gro
up
Co
un
t
ave
rage
thic
kne
ss
Par
en
t
Seam
cou
nt
ave
rage
thic
kne
ss
inte
rval
cou
nt
ave
rage
thic
kne
ss
CHR 0
CHU 7 0.34
CHUU 14 0.34
CHUM 9 0.21
CHUL 15 0.28
CHM 2 0.29
CHMU 18 0.31
CHMM 11 0.28
CHML 19 0.28
CHL 13 0.51
CHLU 17 0.22
CHLM 15 0.25
CHLL 20 0.18
PP1 9 0.32P1U 28 0.35
P1L 26 0.38
GLB 1 0.72
GLU 29 0.34
GLUU 12 0.18
GLUM 11 0.19
GLUL 14 0.18
GLM 28 0.29
GLMU 12 0.18
GLMM 8 0.23
GLML 13 0.21
GLL 35 0.42
GLLU 15 0.29
GLLM 7 0.11
GLLL 14 0.34
ELL 14 0.46
ELU 35 0.33
ELUU 9 0.16
ELUM 5 0.27
ELUL 6 0.21
ELM 22 0.29
ELMU 7 0.20
ELMM 1 0.96
ELML 8 0.18
ELL 42 0.27
ELLU 7 0.25
ELLM 2 0.47
ELLL 7 0.23
EE1 30 0.22
E1U 6 0.16
E1M 1 0.11
E1L 6 0.15
EE2 54 0.39
E2U 10 0.21
E2M 4 0.19
E2L 10 0.22
EE3 31 0.26
E3U 20 0.23
E3M 9 0.21
E3L 22 0.22
JUB 12 0.5
JUU 53 0.28
JUUU 8 0.12
JUUM 7 0.24
JUUL 9 0.21
JUM 38 0.28
JUMU 9 0.18
JUMM 6 0.40
JUML 10 0.31
JUL 57 0.27
JULU 8 0.23
JULM 5 0.20
JULL 6 0.22
AUN 40 0.29
AA1 20 0.23
A1U 55 0.26
A1UU 25 0.26
A1UM 11 0.32
A1UL 25 0.37
A1M 54 0.3
A1MU 2 0.25
A1MM 0
A1ML 2 0.12
A1L 74 0.24
A1LU 8 0.18
A1LM 4 0.45
A1LL 6 0.11
AA2 6 0.65
A2U 73 0.32
A2UU 31 0.17
A2UM 14 0.24
A2UL 30 0.27
A2M 56 0.44
A2MU 36 0.27
A2MM 20 0.26
A2ML 36 0.32
A2L 72 0.46A2LU 33 0.26
A2LM 17 0.19
Seam
Gro
up
Co
un
t
ave
rage
thic
kne
ss
Par
en
t
Seam
cou
nt
ave
rage
thic
kne
ss
inte
rval
cou
nt
ave
rage
thic
kne
ss
A2LL 31 0.33
AA3 2 0.21
A3U 79 0.33
A3UU 31 0.20
A3UM 12 0.17
A3UL 28 0.24
A3M 75 0.32
A3MU 18 0.23
A3MM 13 0.16
A3ML 22 0.29
A3L 84 0.36
A3LU 27 0.18
A3LM 5 0.21
A3LL 25 0.23
BBB 0
BB1 25 0.45
B1U 42 0.26
B1M 3 0.23
B1L 41 0.28
BB2 46 0.34
B2U 10 0.21
B2M 1 0.13
B2L 10 0.19
BB3 11 0.25
B3U 5 0.19
B3M 2 0.22
B3L 4 0.48
Structure
Minescape’s Stratmodel module was used to create the geological model from a subset of the geological
database. Only drill holes which have been deemed to have reliable survey and seam correlations have
been included in the model. The geological model extends to cover the majority of the Burrum Syncline
where resources outside of the Colton Project Area are known to exist. A total of 432 drill holes have
been used in the model, of which 183 are within the Colton Project Area. Of the 433 holes, 199 have been
drilled by NEC and 233 have been drilled by the Geological Survey of Queensland between 1910 and
1950.
The interpolators that have been chosen are those recommended by Mincom for modelling coal deposits.
Seams are cut off in the model by the base of weathering as the upper limit – that is, no weathered coal is
modelled, even though it may be present in the drill holes. The A2UU seam has been identified as the
most recognizable seam within the model and all other seams have been set to trend relative to this seam.
Several reverse faults have been incorporated into the model, in order to represent duplications of seams
intersected in drill holes as well as variations identified in local seam dip. Faulting has also been
interpreted within the basin from 2D seismic survey, and the faulting observed in the drill hole data is
consistent with the style of faulting seen in 2D seismic data. No intrusions have been included in the
model, and no evidence of intrusions has been observed in either recent or historical drilling.
The base of weathering was recorded in 158 of the modelled drill holes, determined by lithological
identifiers such as colour, strength and rock mass fabric. A drilling program that targeted the limit of
oxidation was carried out in 2010. This provided further understanding of the depth of weathering
characteristics of the deposit. The depth of weathering ranges from 6m to 27m, with an average depth of
13m.
Coal Quality Model
A coal quality model has been produced using raw coal quality data. The coal quality data comes from
laboratory analysis of core samples recovered from drill holes. The parameters modelled are given in
Table 6.
Table 6: Modelled raw coal quality parameters
ParameterMinescape Quality
CodeBasis
Raw Ash ASH Mass % (ad)
Raw Inherent Moisture IM Mass % (ad)
Relative Density RD g/cc (ad)
Raw Volatile Matter VM Mass % (ad)
Raw Total Sulphur TS Mass % (ad)
Raw Specific Energy SE Mj/kg (ad)
Raw Crucible Swell Number CSN index
Statistics of data used to create the coal quality model are given table 7.
Table 7: Average raw coal quality statistics for drill hole samples. Quality parameters are weighted
against thickness.
SEAMGROUP
No ofdata
pointsMoisture
% (ad)Ash %
(ad)
VolatileMatter %
(ad)
RelativeDensityg/cc (ad) CSN
SpecificEnergy
Mj/Kg (ad)
TotalSulphur %
(ad)
Churchill 60 2.4 22.4 27.4 1.5 6.6 28.6 0.7
Portland 10 2.0 32.9 26.0 1.5 7.3 17.1 0.8
Globe 67 2.0 17.8 28.4 1.4 6.9 27.3 0.9
Ellengowan 89 2.1 12.8 29.0 1.4 8.0 29.4 0.7
EE 50 1.7 22.5 27.3 1.5 7.0 23.7 0.8
Jubilee 70 1.7 12.5 29.1 1.4 8.0 29.2 0.9
AUN 2 2.0 55.8 17.4 1.9 8.0 - -
AA1 71 1.9 20.1 27.4 1.4 7.3 28.1 1.2
AA2 122 1.9 22.1 26.2 1.5 6.9 25.8 1.2
AA3 106 1.9 19.5 26.5 1.4 7.1 27.2 1.0
BB 7 1.8 33.5 25.2 1.6 7.0 21.4 1.1
As part of the 2009 drilling program, five large diameter (200mm) core holes were drilled within the
proposed open-cut excavation. The purpose of the program was to obtain detailed coal sizing and
washability data for CHPP design, product yield simulations and product composite analysis. Only coal
from the A seam group was sampled as this makes up the majority of the proposed production schedule.
From the five cored holes, 28 working sections were recovered. Each working section underwent detailed
pre-treatment and washability analysis. Using the sizing and washability data, CHPP simulations were
performed in order to assess the behaviour of the coal in a CHPP and estimate the likely product yield and
product ash content.
Following the CHPP simulations, product coal composites were developed and analysed for a suite of coal
marketing parameters. A summary of the results is presented in table 8.
Table 8: results of large diameter core analysis
SEAM Units Basis A1 A2 A3 All
Raw RD ad 1.52 1.52 1.6 1.54
Raw Ash % ad 28.4 28.6 36.6 31
Simprep Yield (no dilution) mass% ad 56.2 57.7 43.9 53.1
Simprep Ash (no dilution) mass% ad 8.8 8 9 8.5
PRODUCT COMPOSITE ANALYSIS
Proximate Analysis
IM mass% ad 2.3 2.2 2.1 2.2
Ash mass% ad 8.8 8 8.9 8.5
VM mass% ad 29.4 29.3 28.9 29.2
FC mass% ad 59.5 60.5 60 60.1
VM mass% daf 33.1 32.7 32.5 32.7
Fuel Ratio (FC/VM) 2.02 2.06 2.08 2.05
Total Sulphur mass% ad 0.83 0.81 0.76 0.8
Specific Energy MJ/kg ad 31.5 31.91 31.69 31.74
Hardgrove Grindability Index ad 70 72 72 71
Ultimate Analysis
C mass% daf 85.7 85.8 86.3 85.9
H mass% daf 5.25 5.23 5.29 5.25
N mass% daf 1.88 1.87 1.88 1.88
S mass% daf 0.93 0.91 0.86 0.9
O (by difference) mass% daf 6.28 6.19 5.68 6.09
Ash Analysis
SiO2 mass% aa 68.5 70.4 69.1 69.5
AL2O3 mass% aa 18.8 20.7 18.9 19.7
Fe2O3 mass% aa 4.96 3.99 3.85 4.23
CaO mass% aa 2.76 1.2 3.07 2.15
MgO mass% aa 0.83 0.53 0.65 0.65
Na2O mass% aa 0.31 0.19 0.27 0.25
K2O mass% aa 0.69 0.62 0.66 0.65
TiO2 mass% aa 0.84 1.26 1.09 1.1
SiO2/Al2O3 Ratio 3.64 3.4 3.65 3.53
Basicity Index 0.108 0.071 0.095 0.088
Minor/Trace Elements (in coal)
Phosphorus mass% ad 0.065 0.03 0.086 0.054
Arsenic mg/kg ad 2.6 1.6 11.2 3.9
Boron mg/kg ad 9 10 9 10
Cadmium mg/kg ad 0.01 0.02 0.04 0.02
Fluorine mg/kg ad 49 116 34 80
Mercury mg/kg ad 0.01 0.02 0.05 0.02
Selenium mg/kg ad 0.09 0.2 0.23 0.18
CSN 8 8.1 7.9 8
SEAM Units Basis A1 A2 A3 All
Mean Maximum VitriniteReflectance %
1.01 1.02 1.02 1.02
Maceral Analysis
Total Vitrinite vol% aa 82.4 83.4 79.1 82
Total Liptinite vol% aa 1.9 1.8 2 1.9
Total Inertinite vol% aa 10.8 10.1 13.9 11.3
Minerals vol% aa 4.9 4.8 5 4.9
Small Scale Coke Oven TestResults
No. of charges 2 2 2
Date of Charge 12-Apr-2010 12-Apr-2010 12-Apr-2010
Coke Yield 72.5 72.5 72.4
NSC Reactivity
CRI 36.2 32.8 34.1
CSR 41.2 45.2 42.8
Modified Micum
M30 Index 77.5 79.6 79.6
M10 Index 11.8 10.6 11.1
The results of the clean coal composite analysis show that a coking coal of moderate to high quality can be consistentlyproduced from the resource. The washability results also provided strong relationships between raw ash % andpredicted yield % and are suitable for mine planning purposes.
.
4. Rate and amount of the proposed mining
This section addresses section 318DT(1)(c)(iii) of the MR Act
A detailed mine schedule was revised in 2011. The mine design, waste volume, coal
tonnage and coal quality are based on the geological model used to estimate the
resource. The mine schedule was based on a 24 hour day / 7 days per week operation
with a targeted production capacity of 0.5Mt of product coal per annum for a period of
up to 10 years. Table 7 gives key production statistics for the initial mine life.
Ratio DataInsitu Ratio waste bcm/insit.t 15.6Rom Ratio waste bcm/rom.t 11.4Product Ratio total bcm/prod.t 25.0
Initial Pit Design - Reserve Physicals
Page 22 of 25
Key production parameters taken from the prefeasibility mining study are summarised in
Table 8. These details will be undated as part of the project feasibility study and reported in a
Later Development Plan.
Table 7: Mining Quantities by Year
Schedule Year Overburden Mbcm ROM - kt Product - kt
Year 1* 3.185 0 0
Year 2 12.149 1055 494
Total 1055 494
*year 1 includes construction and mine development
5. Mining schedule
This section addresses section 318DT(1)(c)(vi)-(v) of the MR Act
5.1 When the proposed mining is to start
Overburden removal is scheduled to commence soon after grant of the Project mining leases
– notionally in October 2012 at the same time as site infrastructure construction commences.
5.2 Schedule for the proposed mining during the plan period
Refer to Table 7 above.
6. Reasons why the plan is considered appropriate
This section addresses section 318DT(1)(f)) of the MR Act
The Project scope and objectives are to:
Extract an open cut coal Resource of ~16.8 Mt at shallower than 150m below surface.
At a production rate of ~ 1.1 Mtpa ROM coal (including partings not included in the
Resource) for 8 - 10 years (current economic assessment of the project at pre-
feasibility study level).
Establish and operate a conventional open cut mining operation using trucks and
excavators.
Construct and operate mine related infrastructure including workshop, offices, and
CHPP.
Have product hauled some 270 km by rail to the Barney Point Coal Terminal at
Gladstone.
The Project is considered by Colton Coal to be viable given the following:
Indicated and Inferred Resource of ~16.8 Mt (reported to JORC standard).
Mining resource suitable for open pit extraction of 8.9Mt within and around the JORCInferred Resource area.
Coking Coal product suitable for use in the steel making industry.
Page 23 of 25
As there is no infrastructure suitable for mine processing activities, heavy equipment
maintenance, coal stockpiling, waste storage and rail transportation located within the area of
or near to the MLA areas, Colton Coal will be responsible for the construction of the full suite
of infrastructure, including the CHPP, stockpiling, administration and maintenance facilities
and train loading at an estimated capital cost of some $60 million and a rail connection to QR
Networks North Coast line.
Coal is Queensland’s highest value export and the coal industry provides significant value to
the State by way of direct and indirect employment, purchase of goods and services and
payment of taxes and royalties. The Project provides an opportunity to add to the contribution
the industry makes to the State with its development in a region not currently directly
benefitting from the continued growth of the coal and other resource sector.
The Project will also provide a benefit to the country on a national scale. This is achieved
through increased foreign revenue from the export of coal and general economic stimulus
through increased employment and the purchase of goods and services.
Colton Coal based on Taroom Coal exploration and data has identified an indicated and
Inferred Resource of ~16.8 Mt within the Project area, of which 8.9 Mt can be economically
extracted using today’s evaluation standards by efficient open cut mining methods to generate
0.5 Mtpa product coal suitable for the international market for coking coals. The project is
anticipated to have a production life in excess of 8 years.
The value of infrastructure construction is estimated to be $60 million (2010 dollars) and a
mining fleet an additional $30 million. Although many of the mining inputs will be imported into
the regional economy the workforce is expected to be recruited locally given the already
substantial number of people who have expressed interest in working on the Project.
It is expected that about $50 million of construction and project preparation expenditures will
be sourced from domestic suppliers and $40 million will be spent on imports. The wage costs
during construction are estimated to be $5 - 6 million, most of which will be Queensland
based. In terms of on-going impacts from operations, the major direct regional impact will
occur through the expenditure of income. The annual gross wage bill is expected to be around
$10.5 million when the project commences. This will result in a significant increase in regional
consumption.
A range of operational expenditures will be sourced from Queensland based firms including
rail services, port services, water and plant maintenance. Full year expenditures on rail and
port services are expected to exceed $10 million per annum.
The Project will pay significant on-going revenue to the State Government through royalty
and payroll tax obligations. Without the mine, these payments will not be received. The
annual royalty payment to the State resulting from sales of the product is estimated to be in
the order of $7.5 million per year at full production at today’s coal pricing. The present value
of revenue payments to the State over the life of the mine is estimated to be $42 million for
royalties and $3 million in payroll tax (2012 dollars).
The Project will directly generate approximately 100 full time equivalent jobs during
construction and then during production to generate spending potential after tax in the
regional area where the workforce is located of approximately $6 million each year.
Page 24 of 25
The Project will have a positive impact on the economy of the region and the State through
ongoing expenditures for materials and services, payment of rates, purchase of infrastructure,
plant and consumables, use of service industries and payment of taxes.
7. How the effect on, and the interests of, any relevant overlapping or adjacentpetroleum tenure holders have, or have not, been considered, having regard tothe main purposes of this part and the CSG assessment criteria
This section addresses section 318DV of the MR Act
Overlapping petroleum tenements: The Colton A and Colton C MLAs overlap oil and gas
exploration tenure ATP613 while Colton B overlaps ATP Application 733. Both ATPs are
registered to Magellan Petroleum (Eastern) Pty Ltd (Magellan). On the public record,
Magellan has a Farm-in Agreement with Eureka Petroleum Pty Ltd (Eureka), a wholly owned
subsidiary of Blue Energy Limited (Blue Energy) under which Eureka can earn a 75% interest
in the tenures on completion of a Native Title Agreement process which will allow grant by the
Queensland Government of ATP 613P (excluded lands), ATP 733A and ATP 674A. ATPA
674 does not impact directly on the Project, but is part of the Magellan/Blue Energy/Eureka
package in the Maryborough Basin. If granted, these 3 petroleum (coal seam gas) exploration
tenures will cover an area of approximately 3,514 sq km. The MLAs cover an area of 1,025.1
ha.
ATP 613 was granted on 23 March, 1995 for a term to 31 March, 2019. ATP Application 733
is yet to be granted (as at January 2012). The Project area is within currently excluded lands
as far as the coal seam gas exploration tenures are concerned. The Project must also deal
with Native Title issues in its own right.
Colton Coal considers that within the constraints imposed by the sequence of operation of the
mining excavation and the fixed nature of the coal mine infrastructure such as workshops,
dams, stockpiles, rail facilities and the CHPP, there are no insurmountable impediments to the
technical and commercial feasibility of coordinated petroleum production and coal production
activities intended for these MLA areas. Colton Coal proposes (where appropriate) to
negotiate for a coordination arrangement with Magellan/Blue Energy/Eureka that provides for
efficient and expedited processes under which the parties obtain further petroleum tenements
and mining tenements and undertake activities in the areas where these tenements overlap.
Statement of consideration of effects: So far as Colton Coal is aware, as at the date of this
application Magellan/ Blue Energy/Eureka have no plans for CSG developments on ATP 613
or ATPA 733 that conflict with, or that may be adversely affected by, the development that
Colton Coal proposes for the area of the Colton A or Colton B MLAs. Magellan has not made
a petroleum lease application over ATP 613.
Although Colton Coal is aware of the presence of coal seams in the general vicinity of its PPs
and it may be surmised that coal seam gas may be present in quantities that could support
commercial extraction in any coal seams below 150 - 200 m, so far as Colton Coal is aware,
no specific information is available that petroleum (and coal seam gas specifically) is present
in commercial quantities in the area the subject of the Colton A, Colton B or Colton C MLAs or
that Magellan (or anyone else) intends to produce any such petroleum as may be present.
Adjacent petroleum tenements: The Project tenures are completely overlapped with, or
overlap, the Petroleum tenures listed above – see Figure 2.
Page 25 of 25
Colton Coal confirms that it has, in preparing this IDP had regard to the main purposes of part
7AA of the MR Act including the CSG assessment criteria.
Colton Coal has in preparing the Colton A, Colton B and Colton C MLAs considered:
the principal objectives of the MR Act in s 2; and
the main purposes of Part 7AA of the MR Act in s 318A.
For the reasons set out in the Colton A, Colton B and Colton C MLAs, including in this IDP,
the Colton A, Colton B and Colton C MLAs are consistent with and promote the objectives of
the MR Act and the main purposes of Part 7AA of the MR Act, particularly in respect of:
the minimisation of land use conflicts (s 2(c)) as described in this application;
ensuring an appropriate financial return to the State from mining (s 2(e), see part 15.1
– Supporting Information to the MLAs and the CSG statement for the Project);
addressing issues arising for coal seam gas mining under the MR Act (s 318A(b), see
the CSG statement and material relating to the CSG assessment criteria in this
application and comments above in this section);
providing certainty of tenure for future investments relating to coal, oil shale and
petroleum (s 318A(d), see the CSG statement and material relating to the CSG
assessment criteria in this application and comments above in this section);
optimising the development and use of the State’s coal, oil shale and petroleum
resources to maximise the benefit for all Queenslanders (s 318A(e), see the CSG
statement and material relating to the CSG assessment criteria in this application and
comments above in this section).
8. How the activities will seek to optimise the use of incidental coal seam gas in asafe and efficient way
This section addresses section 318DW of the MR Act
For all of its exploration activities on the Project area Colton Coal has used drill rigs equipped
with methane detection equipment. Given the friable nature of the coal where it often breaks
apart in coring and would therefore release some entrained methane at least, no methane gas
has been detected. Further Colton Coal has conducted a gas survey of drill hole collars post
exploration and has not detected any methane gas emissions. A specially cored drill hole has
also been tested for entrained methane with a negative result – methane content was zero. In
Colton Coal's (NEC's) review of historical exploration and mining records for the Burrum Coal
Field it has not found any reference to methane gas.
Therefore Colton Coal anticipates that its open pit mining activities will not access or release
