Universal Coal acquires 50% stake in South African coking coal asset

Universal Coal (ASX: UNV) has secured the Donkin licence area, adjacent to the Somerville coking coal project in the Limpopo Province of South Africa, on a farm-in basis. 

Based on historical drilling data, the farm Donkin 72MS property has a Inferred JORC Resource of 42.4 million tonnes, covering the northern extent of a farm area of 1,178 hectares, with the potential for coking coal and open pit access.

Historical data shows a coal zone of up to 20 metres thick present on the northern section of the property. The company anticipates the depth to the coal zone as being between 20-70 metres.

Dr Tony Harwood, chairman, said "we are delighted to have secured an additional farm-in agreement to achieve a 50% shareholding of the Donkin property. This is in line with Universal’s strategy of consolidating key areas surrounding all our project areas.”

Terms of the farm-in agreement are as follows:

- UNV receives an effective 15% ownership upon completion of legal and technical due diligence, once Board approvals are granted.
- UNV will achieve a further;
- 10 % upon confirming the Inferred Coal Resources (25%).
- 10 % on Indicated Coal resources (35%)
- 15% on Measured Coal Resources (50%)
- UNV has a three year period to achieve the above.

At the Berenice-Cygnus Coking Coal project Universal is currently undertaking detailed analysis of samples obtained from the large diameter drill holes on the property to define the detailed coking coal and coke characteristics.

The company expects to receive the results of these tests and analyses in October this year, where-upon Universal will proceed with a Scoping Study and an aggressive Phase 2 drill-out of the deposit to a Measured JORC category.

Universal anticipates that a resource upgrade will be announced shortly.  In July the company announced a 1.2 billion tonne JORC coking coal resource at the Berenice-Cygnus Project.

Universal will also be providing an update on its Kangala Thermal coal project in October this year which will include development and production targets following conclusion of the optimization study currently being undertaken.

Originally published at: http://www.proactiveinvestors.com.au/companies/news/19135/universal-coal-acquires-50-stake-in-south-african-coking-coal-asset-19135.html