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New Age Exploration strengthens position as emerging near term coal producer with U.K. acquisition

New Age Exploration (ASX: NAE) is focused on coal exploration in Colombia. The company has defined a maiden JORC resource of 3.6Mt at Terranova Stage 1 in Cundinamarca, and has a number of other projects moving towards JORC Resources.

New Age Exploration (ASX: NAE) has been granted a low-cost underground licence over a major coking coal project in the UK, strategically located in close proximity to European steel mills.

This is the company’s first coal acquisition outside of Colombia, where it owns a portfolio of coking and thermal coal assets, strengthening New Age’s position as an emerging near term coal producer.

Importantly, there is little financial impact from the granting of the licence as it was secured at minimal cost via a competitive application process from the UK Coal Authority.

There are no vendor payments, leaving available funds to be allocated to the development of the project, known as the Lochinvar Project.

Lochinvar covers 67.5 square kilometres in the Canonbie coalfield and has an exploration target of 330 to 410 million tonnes of potential coking and pulverised coal injection (PCI) coal in the semi-hard to hard coking coal range.

The quality of the coal is expected to be a high volatile, high calorific value, low ash, modest to high sulphur coal with high swell indices.

The exploration target is based on 13 boreholes and 55 kilometres of seismic lines completed by the National Coal Board from the 1950s to the early 1980s.

Multiple seams including the Nine Foot Seam have been shown to have an average thickness of 2 metres and are shallow dipping.

The coal seams start at depths of 100 metres from the surface based on historic drilling and seismic data.

Lochinvar is served by extensive infrastructure including a railway line within 16 kilometres providing access to multiple ports and steelworks.

Access agreements are already in place with two surface owners for proposed mine surface facilities and for exploration activities.

Major European markets exist for Lochinvar coking coal, that are currently importing coking coal from Australia, the United States and Canada.

Europe currently imports around 46 million tonnes per annum of coking coal including around 6 million tonnes per annum into the UK, of which around 76% is sourced from distant suppliers including Australia, Canada and the U.S.

During 2011, landed prices were near US$280 per tonne for Australian and Canadian supplies, and US$250 per tonne for U.S. supplies, which demonstrate the attractiveness for European buyers to consider local sources like Lochinvar in more manageable smaller delivery parcels.

New Age Exploration is targeting the definition of a maiden JORC Resource within 12 months.

The company expects to spend around A$3 million to achieve this.