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Rey ideally placed to help meet Asia’s thermal coal demand

REY Resources is in a great position to help meet Asia’s growing demand for energy through its Canning Basin thermal coal deposits in north-west Western Australia. The company owns 100% of the known coal within the basin, which could be upwards of 1 billion tonnes.
Rey’s managing director Kevin Wilson told The ASIA Miner that the company has a 7000sqkm lease about 150km south-east of the port of Derby and is currently undertaking resource drilling at a number of sites with the aim of delivering an initial resource estimate in the first quarter of 2009 from at least one of these sites.

Preliminary estimates based on historic data and early observations by Rey suggests the Canning Basin thermal coal reserves are very extensive with two areas, Liveringa and Duchess/Paradise, identified for early resource potential.
There is the possibility of establishing open pit and underground operations at Duchess and Paradise projects and underground mining at Liveringa with these sites the focus of initial resource drilling.
the longer term potential is for a multi-mine basin with longwall mining and shallow open cut operations and the possibility of coal seam gas production.
The Canning Basin area is savannah-style in climate with a wet season generally from January to March, which can be cyclonic and only allows drilling to be carried out from April to December.
Rey opened an exploration office in Derby and in May, after the rains had cleared and started its first drilling program at the Canning Basin with a couple of rigs on site.
Kevin Wilson says the port of Derby now exports zinc concentrates but is not a deepwater port. If the Canning operation becomes a major exporter there are options to establish deepwater facilities in the same bay which forms part of
King Sound.
The Canning Basin coal is of Permian age, similar to reserves in the eastern states, and was first discovered in a water well in 1915. There were a number of exploration efforts in the 1960s and 70s by Premier Mining, AIE, Thiess, We are in control of our own destiny and that is one of the attributes that attracted us to the area in the first place
Rey Resources managing director Kevin Wilson ,Esso and others but all were seeking coking coal. They identified coal with thermal qualities but with little coking indication and all withdrew from the area. Feasibility studies were done but, owing to the depressed coal prices at the time, the figures didn’t stack up.

All previous explorers found that there were two coal horizons, an upper seam between 1.5 metres and 3.5 metres thick, and a lower banded seam up to 15 metres thick. Rey was formed in 2003 by current chairman Julian Ludowici who had purchased the lease area. The company had access to previous coal exploration reports on open file as well as reports on petroleum wells drilled in the basin.
The company floated in 2006 and negotiated access agreements with the Traditional Owners of the land in 2007.
Kevin Wilson says: “Once the rains cleared and we gained the required permits from the Traditional Owners we started drilling in May 2008 with the aim of determining a resource early in 2009.
“We are expecting to receive information on the coal’s properties later in the year and it will be used to calculate a resource.
“Expectations from historic data are that the coal can be washed to export thermal standard from at least one of the Canning Basin positions we are investigating.”
One of the key attributes of the Canning Basin deposit is the sheer scale. The area is very large and the coal is found in a series of anticlines and synclines. The coal does appear at the surface but is weathered and there is little visible evidence.
It subcrops along about 200km of strike but the company is initially examining about 80km through a program of up to 25,000 metres of resource drilling and this year is really focusing on around 20km where historical drilling indicated
there to be attractive coal targets. Some scout drilling is also being carried out in other parts of the lease area.
Kevin Wilson says: “Among the advantages for Rey are that the company owns 100% of the known coal in the Canning Basin, it is fairly close to the port compared to other greenfield projects around
Australia and any infrastructure developed will not be shared but utilized 100% by Rey.
“We are in control of our own butes that attracted us to the area in the first place.
“There is huge growing demand for thermal coal from China, India, Korea and Vietnam, which should ensure plenty of interest for future sales and our location puts us in a better position to supply these countries, particularly India and South East Asia, than operators on the east coast.
“Without this demand and subsequent strong coal prices, neither of which look like declining, the project would be less attractive.”
Indian coal and energy supplier Gujarat NRE Mineral Resource has a 15% stake in Rey while directors and executives hold another 25%. This total ensures a good degree of board interest in the project.

This year the company’s focus is on exploration. In 2009 it expects to focus on a feasibility study as well as infill drilling. Assuming these are positive it will move to permitting and financing before construction,destiny and that is one of the attri-tion and then production