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BARADINE COAL PROJECT
Background
Baradine Bay Pty Ltd owns two coal exploration tenements (EPC 1097
and EPC 1098) in northern Queensland. The tenements cover 1725 square
kilometres of the edge of the Galilee Basin and are centred on a
single drillhole (BEA 315) drilled in 1996 for mineral (gold) exploration.
The hole encountered six metres of coal at a vertical depth of 41m
beneath transported Tertiary cover. The coal intersected in BEA
315 is classified as low rank, low-medium ash, low-medium energy,
high volatile thermal coal.
The coal appears to be situated in a sub-basin related to the Galilee
Basin. To the south west in the Galilee Basin proper, a number of
companies, including Xstrata, are actively exploring for coal. There
are plans to build a coal fed power station near Charters Towers
40kms to the north east of the project.
Polo Resources has entered into an option agreement with Baradine
Bay Pty Ltd
As consideration for the option the Company has:
- paid BBL a cash consideration of US$150,000 and agreed to allot
and issue, as fully paid, US$250,000 worth of ordinary shares
in the Company to BBL, based on the weighted price of ordinary
shares in the Company for the 14 days preceding the date of the
Option Agreement; and
- agreed to undertake A$300,000 of drilling and exploration activities
on the land covered by the Coal Permits in the six months following
grant of the option to Polo.
If the Company chooses to exercise the option it has agreed to
pay to BBL a further cash consideration of US$300,000, and allot
and issue, as fully paid, further ordinary shares in the Company
worth US$700,000. On exercise of the option, the Company and BBL
will enter a joint venture agreement setting out the ongoing management
and financing obligations of each party which shall in both cases
reflect the 80/20 split.
The project has a number of positive aspects:
- It is a new discovery, although found in 1996, no follow-up
drilling was undertaken.
- The coal is relatively shallow, and relatively flat dipping
(<150 ) and could well be opencuttable (strip ratio <6:1).
- A simple and quick exploration programme, totalling approximately
A$310,900, would determine if the project is commercial or not.
- The project straddles the main Mt Isa – Townsville rail
line and 270kms from the Abbot Point coal terminal. Whilst domestic
usage is envisaged, export coal may be a possibility.
A twelve hole programme is planned to allow for a definitive answer
to the coal potential of the area. Holes will be a mixture of RC
and HQ core, and will be drilled at a 1000 metre spacing with an
average depth of 70 metres. The programme will take an estimated
25 days to complete. Coal samples will be dispatched to Rockhampton
for coal quality testwork.
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