The Zhun Dong project has been explored in sufficient detail to delineate a large resource spread throughout nine coal seams totalling 2.9 billion tonnes of thermal coal. Coal quality analysis indicates the coal is high quality "long flame" thermal coal with low ash and sulphur levels, which is well suited for the Chinese market.
In successfully completing the exploration programme for 2009 on time and to budget with no time lost from any injuries, the resource has recently been upgraded to include a maiden resource of 266 million tonnes at 332 indicated intrinsic economic resources. The total resource stands at approximately 2.9 billion tonnes of thermal coal. This has been confirmed by the Chinese geological team, Shandong Institute of Mapping and Surveying of Geology, who have sufficient experience and authorisation to undertake field exploration programs and reporting to Chinese specifications and standards.
A summary of the results is set out in the table below:
| Millions of tonnes |
Resource Category |
Total |
| Coal Seam No |
332 |
333 |
334 |
332+333+334 |
| 1 |
170 |
572 |
928 |
1,670 |
| 2 |
- |
- |
55 |
55 |
| 3 |
24 |
14 |
50 |
88 |
| 4 |
22 |
87 |
174 |
283 |
| 5 |
17 |
46 |
56 |
119 |
| 6 |
21 |
130 |
300 |
451 |
| 7 |
12 |
31 |
164 |
207 |
| Total |
266 |
880 |
1,727 |
2,873 |
| |
| Resource estimation result of the combined exploration areas and is subject to rounding |
The coal quality of the main coal seam, Seam 1 consisting of about 1.7 billion tonnes is confirmed as good quality, low sulphur thermal coal (Chinese Classification BN31) with the raw coal properties summarised in the following table. Testing results from the other six seams confirm the quality as similar to Seam 1. Gas testing and ground strength tests to-date, are supportive of the approach for underground mining.
The summary of the Seam 1 coal quality is set out in the table below:
| Moisture |
Ash |
Volatile Matter |
Total Sulphur |
Energy |
| Air dried % |
Air dried % |
Air dried % |
Air dried % |
Q(b.d) NCV as MJ/Kg |
GCV as MJ/Kg (ad) |
| 6.6 |
9.7 |
29.0 |
0.14 |
27.5 |
26.5 |
The company has commenced the 2010 exploration program to:
- preserve the good standing of the four Zhun Dong exploration licences;
- complete the current stage of detailed exploration more than one year earlier than required under applicable Chinese regulatory requirements;
- further increase the confidence and size of the current resource;
- complete the field work activities by the end of September; and
- present to and have approved by the relevant Chinese regulatory authorities the reported resource by the end of 2010.
The 2010 program, with the assistance of the Shandong Institute of Mapping and Surveying of Geology, involves drilling 27 holes of approximately 22,000 metres at a total cost of approximately RMB 23 million (approximately US$3.4 million), which includes all related surveying, logging, coal analysis and reporting work.
The renewal of the exploration licenses is expected to take place earlier than is otherwise required and will be closely followed by engineering design and feasibility programs to confirm the full potential for mining. Thus, coupled with the development of significant rail infrastructure and coal consumers in Xinjiang, provides strong potential for Zhun Dong to become a large scale economic coal mine.