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NSL Consolidated Limited
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20 December 2011
ESSENTIALS FOR WORLD-CLASS QLD THERMAL COAL ASSETS
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HIGHLIGHTS
Updated technical modelling and interpretation by NSL Consolidated throughout
2H calendar 2011 has reinforced the strong project development potential for the
Company’s world-class thermal coal assets in Queensland.
Queensland Exploration Permit for Coal Applications (EPCA) 2198, 2336, 2337 &
2338 have a total defined Exploration Target of 6.6 – 18.7 Billion Tonnes1 of thermal
coal.
Additional Coal Quality Data, Coal Seam Thickness, Coal Seam Depth,
Infrastructure analyses completed.
Initial Exploration Drilling Programme set for 2012, including maiden 9 hole scoping
drill campaign as a precursor to full exploration programme.
Analysis further underpinned by recent drilling and discoveries on nearby or
adjoining EPC’s – EER, RMA, ICX and CBQ.
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Bulk commodities developer, NSL Consolidated Limited (ASX: NSL, Company) is pleased
to today release detailed analysis resulting from the Company’s new technical modelling
and interpretation work on its four thermal coal exploration tenements in Queensland.
The results are in addition
to the results of due
diligence via an
Independent Geologist’s
Report (Mark Biggs,
Moultrie Group, July
2011) on EPC
Applications 2198, 2336,
2337 & 2338 (Projects) in
Queensland and
released to the market
on 18 July this year.
The projects are located
in the Eromanga Basin in
south western
Queensland, adjacent
to similar projects held by East Energy Resources (ASX: EER), Sentry Petroleum Limited
(NASDAQ OTC – SPLM), International Coal Limited (ASX: ICX) and China National Rail’s
(CREC) RMA Energy (ASX: RMT).
1 It should be noted that the tonnages quoted above are conceptual in nature and there has been insufficient exploration to define a Mineral Resource
and it is uncertain if further exploration will result in the determination of a Mineral Resource.
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Economies of Scale – Substantial Exploration Target
Table 11 – Calculation of Exploration Target Tonnage Range for the Project Area
Tenement Formation Area (m2)
Average
Cumulative
Thickness
(m)
Relative
Density
(Kg/m3 ;adb)
Gross Tonnage
tonnes
Unexpect
ed
Geologic
al Loss %3
Exploration
Target 1
(Million tonne)
EPC 2198 Winton 200,000,000 2.4 1.5 820,800,000 30 500 – 600
EPC 2336 Winton 334,587,000 4 1.55 2,074,439,400 30 500 – 1,400
EPC 2338 Winton 270,190,000 6 1.55 10,555,402,500 30 2,000 – 7,400
EPC 2337 Winton 240,990,000 8.5 1.55 14,743,285,500 30 4,000 – 8,500
EPC 2198 Mackunda 105,000,000 1 1.5 63,000,000 40 0 – 50
EPC 2336 Mackunda 334,587,000 0.5 1.55 259,304,925 35 0 – 250
EPC 2338 Mackunda 270,190,000 1 1.55 418,794,500 35 100 – 400
EPC 2337 Mackunda 240,990,000 0.5 1.55 186,767,250 35 0 – 100
Total
6,000 – 18,700
Historical Petroleum Drilling Proof of Existing Coal
NSL has been able to further utilise historical data from petroleum exploration wells drilled
in close proximity to EPCA’s 2198, 2236, 2337 and 2338
The exploration petroleum wells surrounding the project area have been carefully
selected on the basis of proximity and distribution.
Most significantly, the wells drilled as outlined in Table 2, are within a sufficiently
reasonable distance for an Exploration Target for thermal coal to be estimated. This is
due to the consistency of coal seams and a coal profile evident in other resources drilled
in the area. Table 2 indicates the proximity and the distribution of these wells around the
project area.
Table 2 - Summary of Previous Exploration Permits for Petroleum (see location map at Appendix 1)
Petroleum Well Proximity to
Project Area Total Depth (m) Total Depth (ft)
QDEX Report
No
Blondie 1 36 Km South 1,036.32 3,400.00 29872
Emu Creek 1 6 Km East 1,327.00 4,353.67 16868
Gillmore 2 11 km North 4,143.10 13,592.85 1863
Gumbaro 1 5.5 km West 3,944.10 12,939.96 1049
Kaloola 1 5 km North West 1,685.00 5,528.22 15641
Rolwegan Creek 1 8 km South East 1,240.00 4,068.24 13564
1 It should be noted that the tonnages quoted above are conceptual in nature and there has been insufficient
exploration to define a coal resource. No coal quality data for the project area was uncovered in previous reports.
Although a preliminary analysis was undertaken, insufficient data exists to confidently correlate coal seams and
generate a grid mesh model. Unexpected Geological loss is designed to account for seam splitting and thinning.
It is uncertain whether further exploration may lead to the reporting of JORC standard resources. However, there is
considerable evidence to support the current Exploration Tonnage calculations, and the sufficient coal thicknesses
interpreted from historical drilling warrant further investigation.
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Boreholes from the historical exploration programs in the vicinity of this project area are
clustered in two populations (Appendix 1). In the northern exploration area, the EPCs
include EPC 154, 165, 166 and 367. The EPCs in the southern exploration area include EPC
297 and 298. Borehole information has been collected from open file reports and
tabulated for analysis. These two areas are separated by just under 100km.
The northern EPCs 165 and 166 were explored by Thiess Bros. in the 1970s and are related
in character as they make up an extended exploration program (Thiess Bros., 1974; Thiess
Bros., 1975). EPC 367 was explored in 1982 by Langlo Downs. A review of this exploration
program drew the consensus that the drilling was too shallow to intersect all the coal
seams of the Winton Formation (Handke, 1982). Drill cores from the Winton Formation did
indicate that there are around four or five currently unnamed seams, one about 3 to 4m
thick, and the others, thinner, at about 1m.
The southern EPCs 297 and 298 were explored by Pacific Coal in the 1980s and can also
be viewed as an extended exploration program (Hewitt, 1981). These exploration
programs are located on an anticlinal feature. During these drilling programs, a total of
30 boreholes were drilled. Nine boreholes were partially cored, and a total of four
samples were sent for analysis. The cumulative thickness of the coal seams was around
10.9m.
The Winton Formation, within the Eromanga Basin, is the main targeted-formation over
NSL’s EPC Applications 2336, 2337, 2338 which contains some 15 coals seams from
surface to 130m at an average thickness of 3-5m per seam. Further coal seams continue
from 130m-250m and deepen to 480m in the north before petering out.
Figure 1 Source: Independent Geologist Report Moultrie Group July 2011 For
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Coal Quality Data Supports a Thermal Coal Product
Historical boreholes from EPC 165 and EPC 166 were analysed to determine the raw
quality of the samples. Analytical test work was carried out by the Australian Coal
Institute Research Laboratory (ACIRL Ltd). The samples were cumulatively floated at a
relative density of 1.80 to produce a simulated product.
Analytical test work on EPC 367 was carried out by ACIRL Ltd. Analysis was carried out on
a bulk sample over a thickness of 6.97m to determine the composite float and sink
fractions.
An indication of potential coal quality can be garnered from East Energy’s reported coal
quality shown in Table 3. These results indicate a possibility for a thermal coal product
from select working sections.
Table 3 – East Energy Blackall Coal Deposit washed Coal Qualities and Yields at F1.60 SD
Seam Group Yield F1.60 Ash1 F1.60 VM1 F1.60 CV1 F1.60 CV2 F1.60
% ad % ad % ad kcal/kg DAF kcal/kg
350kg Bulk Sample 70 12 31 5,000 6,755 VM Volatile Matter ad Air Dried basis 1Analysis on air dried basis F Float CV Calorific Value daf Air Dried Ash Free basis 2Analysis on dry ash free basis
Coal Seam Thickness
Based on historical drilling and data modelling by NSL’s independent geologist, Figure 2
below has been generated to show the contours of cumulative thickness of coal.
The borehole Ping_R17 drilled on the southeastern corner of EPCA 2337 shows contours of
cumulative thickness of coal coloured dark red which represents a cumulative thickness
of 16-16.5 metres gradually becoming yellow 12.5-13 metres, light green 10-11 metres
and then light blue representing 7-8 metres to the west along the southern border of
EPCA 2337. Further historical coal exploration holes Ping_C2, Ping_C5 and Ping_16
support these contours of cumulative thickness of coal. We can reasonably conclude the
coal seams in this area (southern EPCA 2337) are between 7-15 metres cumulative
thickness, which is reflected in the Exploration Target of 4 – 8.5 Bt, where a conservative
8.5m was used in the calculation.
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Coal Seam Depth
Based on historical drilling and data modelling by NSL’s independent geologist, Figure 3
below has been generated to show the depth to the top of the first coal seam.
Again, borehole Ping_R17 drilled on the southeastern corner of EPC 2337 shows contours
coloured dark blue at 50-52 metres depth gradually becoming lighter in colour to
grey/white representing a depth of 30-32 metres to the west along the border of EPC
2337. Further historic coal exploration holes Ping_C2, Ping_C5 and Ping_16 support these
contours to the top of the coal. We can reasonable conclude that the uppermost coal
seams in this area (EPC 2337 south) are at a shallow depths, generally <50m.
On 26 October
2011, Coal Bank
Limited (CBQ) in
relation to drilling
at its Blackall
Project announced
that “Eighteen
holes have now
been completed
with coal seams
being intersected
at relatively shallow
depths over a
distance of
approximately 28
kilometres. Total
coal thicknesses
have exceeded 10
metres in several
holes, based on
analysis of wireline
geophysical logs”.
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Infrastructure Development Continues
Port Capacity Building
The Queensland government announced it has given provisional approval to build six
new coal terminals as part of a $9 billion expansion of the Port of Abbot Point.
The expansion of the North Queensland port will boost its capacity to almost 400 million
tonnes a year, making it one of the largest coal export facilities in the world.
The government had planned to add four terminals at Abbot Point but stronger than
expected interest from coalminers boosted numbers to six.
Indian port operator Adani Group earlier this year bought the existing 50- million-tonne
capacity terminal. BHP Billiton and Hancock Prospecting are developing the second and
third terminals.
The first coal is expected to be exported from the six new terminals in 2017, with total
capacity of 385 million tonnes.
Rail Capacity Building
Hancock Prospecting (Hancock Coal) is one of a number of interested parties that have
approached the Queensland
Government proposing two 60
Mtpa mining ventures consisting of
Galiliee Basin coal. Two mines (the
Alpha Coal Project and Kevin’s
Corner Coal Project, each of 30
Mtpa capacity) are proposed by
Hancock Coal. Both projects have
been declared “significant
projects” under the State
Development Public Works
Organisation (SDPWO Act) 1971.
The coal from both projects would
be exported through the Port of
Abbot Point. The Hancock Coal
Rail project includes the
construction and operation of a
new privately owned rail line to
transport coal 495km from the
Galilee Basin to Abbot Point coal terminal, north of Bowen. The stand alone, standard
gauge line will be open for third party access due to its classification as a “significant
project” by the SDPWO.
Blackall Rail
Calibre Rail was commissioned by East Energy Resources to undertake a preliminary
review of rail infrastructure options, including a 285km extension of Hancock Alpha
Railway to Blackall. Queensland Transport Department permission was provided to
access existing rail corridor from Jericho to Blackall for the Preliminary Rail Study. East
Energy had made an initial Expression of Interest to secure 20 Mtpa export capacity at
the new T4-7 port expansion at Abbot Point (ASX release 17 May 2011).
Source: East Energy announcement 17 May 2011, Company Presentation
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NSL Coal Rail Link
NSL’s EPCA 2336 is approximately 62kms from the East Energy Blackall Project. NSL’s
EPCA’s 2337 and 2338 are adjoining 2336 to the south.
Initial Scoping Exploration Drilling Programme 2012
Upon granting of the 4 EPCs, NSL will be ready with a drilling contractor and other
services to commence immediate exploration on these highly prospective thermal coal
projects.
The objective of this initial scoping drilling program is to add value to the current
resources estimation and establish a general continuity of the deposit over the project
area. The initial scoping Exploration Plan is based on drilling and downhole geophysics.
The information gained will allow the correlation of the seams the determination of the
precise extent of the coal, indicate the relative quality of the coal and will form the basis
for a future drilling program. This exploration program relies on the results of each hole to
provide data to define the successive holes. Nine (9) rotary chip holes have been
planned that are located over four (4) EPCA’s (Appendix 2 – NSL’s Exploration Plan).
All the holes in this program require downhole surveying of the drilled holes with the
standard geophysical tools: density, gamma, sonic and calliper. These holes would
require geophysical surveys to determine the roof and floor of the coal seams; verify the
lithology present and indicate the quality of coal that is present.
Results of the initial scoping exploration programme will contribute data to plan the full
exploration drilling programmes throughout the projects.
Predictions
Table 4 below, shows the predicted top of coal and predicted base of the sequence
(Winton Formation) with recommended total depth for each borehole.
Table 4 – Predictions of total depths based on proximal Petroleum Wells and surface elevation
Borehole Target
EPCA X (mE) Y (mN) Col Elev (m) TOC (m) BOS (m) TD (m)
BH1 2337 280157.2 7091653 284 20 175 185
BH2 2337 294615.3 7091691 307 15 175 185
BH3 2337 287272.1 7101013 286 35 175 185
BH4 2336 307394.5 7165723 319 90 300 315
BH5 2338 277869.6 7154460 270 120 250 265
BH6 2338 278743.1 7128942 278 75 160 175
BH7 2198 376635.0 7167377 372 20 180 200
BH8 2198 381072.5 7167429 386 24 200 220
BH9 2198 389328.4 7159379 406 30 200 220
Co-ordinates are in MGA94 (SS) Total Depth (m) 1950
The nine (9) holes, once setup, could be drilled within 3-4 days each, making the total
continuous drilling time estimate thirty six (36) days.
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Recent Announcements Show Further Known Resources Near By
Sentry Petroleum Limited - NASDAQ Listed EPP862
and EPP864 quoted a “2000 square mile coal
deposit”
Coal Bank Limited - Listed on the ASX. (Tambo Coal
& Gas Pty Ltd) EPC 1719 and EPC1993
• Eighteen holes have now been completed
with coal seams being intersected at
relatively shallow depths over a distance of
approximately 28 kilometres.
• Total coal thicknesses have exceeded 10
metres in several holes, based on analysis of
wireline geophysical logs.
RMA Energy Limited - Listed on the ASX (EPC 1125,
1127 1128, 1942)
• Announced 30 Oct 2011, drilling
programme planned for the Bulburrum Coal
Project
International Coal Limited - Listed on the ASX (EPC
2197)
• Drilling underway with significant coal seams
intersected at 45 metres with other seams
encountered at 70 and 145 metres,
• Programme has been expanded from an
originally proposed 9 holes to up to 20 holes
covering an area of up 400 km2,
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For more information:
Cedric Goode Julian Tambyrajah
Managing Director/CEO Chief Financial Officer
NSL Consolidated Limited NSL Consolidated Limited
+61400 408 477 +61 419 900 369
COMPETENT PERSON’S STATEMENT
Technical information relating to the coal projects in this announcement has been compiled by Mr Mark Biggs,
Principal Geologist of Moultrie Database and Modelling. Mr Biggs is a member of the Australasian Institute of Mining
and Metallurgy and has over 24 years of experience relevant to the style and type of coal mineralisation under
consideration and to the activity which is being undertaken to qualify as a Competent Person as defined by the
Australasian Code for Reporting of Minerals Resources and Reserves (JORC) 2004. The estimates of the Coal
Resources presented in this Report are considered to be a true reflection of the Coal Resources as at 1st July 2011 and
have been carried out in accordance with the principles and guidelines of the Australian Code for Reporting of Coal
Resources and Coal Reserves published in September 2004 (JORC Code). Mr Mark Biggs consents to the inclusion in
this announcement of the matters based on this information in the form and context in which it appears.
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APPENDIX 1
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APPENDIX 2
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