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Surat Basin Projects

Cockatoo Coal’s Surat Basin projects as at 1 May 2008 comprise:

·          Guluguba (MDL 187).

·          The Surat project (EPCs 796, 813, 1041 and 1136 and EPCAs 1134, 1135 and 1170).

·          The Kingaroy project (EPC 882).

·          The Condamine project (EPCs 935, 936, 963 and EPCA 1130).

·          The Injune project (EPCA 1017 and 1018).

·          A 20% interest in an underground coal gasification (‘UCG’) project with Cougar Energy Limited (‘Cougar’) over EPCA 1118.

·          A 25% interest in a coal to liquids project (‘CTL’) with Eastern Mining Corporation Pty Limited (‘EMC’) over a portion of  EPCs 935 and 936 and the adjoining EMC coal tenements EPC 1076 and EPCAs 1137 and 1138 which, as advised previously, has been negotiated to be sold.

Guluguba

The Company has, through a wholly owned subsidiary, a 100% interest in the Guluguba project.  Guluguba (MDL 187), which covers an area of 911.1 hectares contains a full sequence of the coal bearing Walloon Sub-Group.  The Juandah Coal Measures, the uppermost formation within the sub-group, sub-crops over the area and previous exploration indicated an Indicated Resource of 56.18 million tonnes with the majority of this resource (34.37 million tonnes) at a stripping ratio of approximately 5:1.

Guluguba Exploration and Drilling

Data review and modelling undertaken by Mincom Ltd has defined a 103.53 Mt Measured Resource of raw product, at a stripping ratio of 4.2:1.0.  This is a significant increase from the previously known Indicated Resource of 56.18 million tonnes at a stripping ratio of approximately 5.0:1.0.

The updated resource estimate of the Guluguba project, including structural and resource modelling, has been completed during the March 2008 quarter following further correlation and cross-checking of coal plies and interburden lithologies.  The review included ply by ply correlation across the Guluguba deposit within MDL 187, utilising core and non-core drilling results integrated with down-hole geophysical logging of all holes.  Drilling conducted included:

·          140 open holes on a 250 metre grid spacing covering most of the lease;

·          a 30 hole, part-cored program, with holes drilled at 500 metre spacing adjacent to selected previous open hole locations; and

·          a program of 32 shallow (+20 metre) depth of weathering of the coal seams (oxidation or L’ox line holes).

Additional coal quality and L’ox drilling is currently being planned for the June 2008 quarter.  Detailed mining and coal preparation studies will commence in the current quarter, including scoping of additional large-diameter drilling, wash plant design and conceptual infrastructure planning. The additional coal quality sampling will compliment the established data set. 

MDL 187 Guluguba Drill Hole and Seam Sub-crop Plan

The Surat Project

Exploration drilling activities in the March 2008 quarter were hampered by wet weather.  As a result, only 16 open holes were drilled in EPC 1041A.  The delays experienced due to wet weather enabled desktop reviews of historical exploration results in the Surat project area.  Numerous targets have been identified, and will be drill-tested in the coming months.

Exploration drilling targets for the Surat project area are initially focused in EPC 1041 and will expand to include EPC 813 and EPC 796 in the coming months.

Surat Project Exploration and Drilling

Exploration drilling activities were attempted during the first month of the quarter with 2 rigs operational, however, due to significant rain delays, activities were suspended at the end of January 2008 at which time 16 open holes had been drilled.  Drilling operations recommenced early in the current quarter when ground conditions improved.

Results from the 16 completed holes are encouraging, with multiple thin (1-2 metres) coal seams identified.  While drill holes are located approximately 2 km apart, lateral continuity of seams is apparent.  Further drilling in the June quarter, together with analysis of down-hole geophysical results, will enable vectoring towards thicker coal intersections.

 

Surat Project Areas and Preliminary Drill Targets

The Kingaroy Project

Through a wholly owned subsidiary, the Company holds EPC 882 Kingaroy and the identified Taabinga coal deposit therein.

EPC 882 is situated south of Kingaroy in, the South Burnet Region.  Taabinga currently has a Measured and Indicated coal resource totalling 163.8 million tonnes (35.5 million tonnes Measured and 128.3 million tonnes Indicated).  The three main seams present at Taabinga are the Kunioon, Swain and Goodger seams.

The Kingaroy Project is strategically located 25 kilometres from the Tarong Power Station, the largest power station in Queensland.  Tarong Energy has announced that it will it develop the Kunioon coal deposit, recently acquired by Tarong from Rio Tinto, for future supply to Tarong power station.

The Kunioon deposit sits within the Company’s EPC 882 Kingaroy, and potential synergies with Tarong Energy are being evaluated by the Company.

An underground coal gasification ('UCG') exploration drilling program, managed by the Company’s Joint Venture partner Cougar Energy, continued during the March quarter.