1.2.3.1.15 Blackall Coal Project

East Energy Resources Limited (EER) is a coal exploration and development company focused on the Mesozoic coal resources of the Eromanga Basin, Queensland. Currently, EERs main focus is the Blackall Coal Project about 25 km south of the town of Blackall (Figure 12). The Blackall Coal Project consists of three main coal resource areas within three coal exploration tenements (EPC 1149, EPC 1398 and EPC 1399). As of September 2014, the total resource across the entire project area is estimated in accordance with the JORC Code as 3.44 billion tonnes of thermal quality coal (EER, 2014).

In November 2011 EER applied for MDL 464 to undertake more detailed resource characterisation studies for the Blackall deposit, and this was granted by the Queensland Government in July 2014 (EER, 2013). In contrast to other coal projects with MLA or MDL holdings in the Galilee subregion, the coals of the Blackall Project are hosted within the Late Cretaceous strata of the Winton Formation. This unit is significantly younger than the Late Permian rocks which contain the more well-known and regionally extensive coal resources of the eastern and northern Galilee Basin.

Initial exploration programmes undertaken by EER identified six main intervals of sub-bituminous coal within EPC 1149 (designated as seams 1 to 6). Most of these seams have several upper and lower plies, with the thickest being seams 2, 3 Lower (3L), and 4 Upper (EER, 2014). The coals have average raw ash content of 22% and moisture levels ranging from 18 to 22% (air dried basis). The initial resource evaluation area has a strike-length of about 95 km and a mean width of 6 km, with current resources in EPC 1149 totalling 1.74 billion tonnes (resources estimated by a Competent Person as defined by the JORC Code). This comprises of 627.5 Mt of indicated resource, and 1113 Mt of inferred resource (EER, 2014).

In May 2013 EER purchased Idalia Coal, which increased the size of their tenement holding within the Blackall region through acquisition of EPC 1398 and 1399 to the immediate south and north of EPC 1149, respectively. This acquisition initially added a further 440 Mt of inferred resource of similar quality coal to the EER portfolio, as well as a significant regional exploration target (EER, 2013). Further investigative work commissioned by EER in 2013, including a 68 hole drilling program, resulted in an upgraded coal resource for EPC 1399 totalling 1504 Mt of inferred resource reported in accordance with the JORC Code (EER, 2014). The current exploration target at Blackall across EPC 1398 and EPC 1399 is estimated at 2.0 to 2.5 billion tonnes of coal (EER, 2014).

Previous work commissioned by EER examined potential options for future development of the large scale sub-bituminous coal resources on their Blackall tenements. The final report stated that the coal quality is suitable for thermal energy use, and the volume and architecture of coal-bearing strata are amenable to large scale open-cut mining (EER, 2013). With further brownfield exploration aimed at increasing the resource size, there is potential to develop a 30 year mine life, with staged production schedules eventually ramping up to full capacity of about 20 Mt/year of washed coal product. Potential market options identified included supplying a local power station (which would need to be built), coal for sale to domestic or export markets, coal gasification, and gas to liquids conversion.

Given the large tonnage of the current resource identified at Blackall Coal Project and further resource definition drilling planned in the future (EER, 2014), there may be potential for EER to consider future mining operations at Blackall. Several independent studies have now been undertaken to better understand the geology, resources, mining options, infrastructure requirements and financial considerations of developing the Blackall Coal Project (EER, 2013). However, at this stage, the timing and details of such developments are unknown, and will depend on factors such as securing access to infrastructure and signing sales contracts for the coal resources.