Perth-based gold and base metals mining company Mantle Mining Corporation Ltd will acquire the coal assets of West Perth-based Trafford Resources Ltd for around $660,000 in cash and scrip, Mantle announced today.
Perth-based gold and base metals mining company Mantle Mining Corporation Ltd will acquire the coal assets of West Perth-based Trafford Resources Ltd for around $660,000 in cash and scrip, Mantle announced today.
In acquiring all share capital of Trafford subsidiary Trafford Coal Pty Ltd, Mantle will hold 87.5 per cent of the Mt Mulligan coal deposit in Queensland, including coal seam methane rights. The 500 million tonne deposit is about 100 kilometres west of Cairns.
The company will pay $100,000 in cash and issue two million fully paid ordinary shares to Trafford as part of the transaction.
Mantle said the acquisition provided it with a more diversified portfolio of assets and access to significant participation in the strong energy market of North Asia.
Shares in the company closed up 86.67 per cent at 28 cents on the news.
The full text of a company announcement is pasted below
Mantle Mining Corporation Limited (ASX: MNM), is pleased to advise that it has entered into an agreement with Trafford Coal Pty Ltd (Trafford) whereby it will acquire 87.5% of the Mt Mulligan coal deposit, including coal seam methane (CSM) rights, via acquisition of 100% of the share capital of Trafford.
The deposit, which is approximately 100km west of the Port of Cairns (see EPC 772 in map below) is estimated at approximately 500 million tonnes, with a theoretical washed specification (from CRA (1975) and International Mining Corporation (1982)) including:
- specific energy: 26-28 MJ/kg
- sulphur: 0.3-0.4%
- ash: 14-18%
The acquisition provides the Company with a more diversified portfolio of assets and access to significant participation in the strong energy market of North Asia.
The total consideration payable by Mantle: $100,000 cash and the issue of 2 million fully paid ordinary shares in Mantle at a deemed issue price of 20 cents each.
The Permian Mt Mulligan Coal Measures cover an area of approximately 63square km, and are exposed at the base of the 150 - 350 metre thick Triassic sandstone Mt Mulligan mesa. The measures contain four potentially significant coal seams, which vary in thickness between 0.7 - 7.5 metres. The upper member of the Measures is a high volatile (35.3%), high ash (18%), low rank (Ro max of 0.75). low sulphur (0.30%) thermal coal within the bituminous range, with a medium specific energy of 24MJ/kg.
Historically, under the Guidelines for the Estimation and Reporting of Australian Black Coal Deposits (1999), Mount Mulligan had an identified Class 1 deposit of 144m tonnes and an identified Class 2 deposit of 507m tonnes.
Despite being mined for over 40 years the deposit is under explored, with only two holes effectively testing the basin. It is anticipated that straightforward mining techniques of conventional highwall and longwall mining will be used. A total of 981,007 tonnes of coal were mined from the field between 1910 and 1957.
Trafford holds a Call Option over an 87.5% interest in the tenements, which are currently held by Calcifer Industrial Minerals Pty Ltd, which Mantle intends to exercise (leaving Calcifer with 12.5%).
The acquisition concerns the tenements EPC 772 (rights to coal) and ATP 718P (rights to coal seam methane), which are virtually coincident. The deposit was mined during the period from 1910 to 1957, when the local power station was shut down and rail locomotives converted to diesel. Road and rail infrastructure to the port of Cairns are in place.
Mantle intends to next progress:
The Conceptual Study is intended to take up to two months and will pull together existing and new data regarding the deposit and development issues, including addressing such matters as:
- Exploration program, including significant drilling, for improved understanding and upgrading the status of the deposit;
- Likely parameters for a longwall operation, the preferred underground mining technique, including indicative capital and operating costs;
- Likely preferred highwall mining technique, including indicative capital and operating cost;
- Beneficiation issues;
- Appropriate utilisation of washery reject material, for possible power station feed or upgrading and sale;
- Appropriate utilisation of CSM, for sale as gas or use of power station feed;
- Infrastructure, access and development issues, including road, rail and port matters; and
- Environmental and heritage issues.
The Conceptual Study will provide a framework for development planning. Subject to infrastructure issues and constraints, the likely path to development will involve initial implementation of highwall mining, to provide cash flow and an operating base at site to assist with expanded coal production via longwall operations and the other development opportunities at Mt Mulligan.
Subsequent to the closure of the coal mine by the State Government, the deposit was held by CRA (in the early-mid 70's) and by International Mining Corporation NL (early 80's), who generated the estimated size of the deposit noted above - during which periods the relative demand for coal was such as to not justify re-opening the mine. The circumstances of the international coal market are now significantly more positive however.
