Rey Resources’ Duchess Paradise coal project keeps getting bigger, and better

Rey Resources' (ASX: REY) drilling has confirmed the strike extent of the coal outcrop for two kilometres to the north, beyond the coal reserves in the existing mine plan at its  Duchess Paradise thermal coal export project.

The presence of the continuous shallow coal occurrences potentially extends the proposed mine life at the project in the Canning Basin, Western Australia, boosting the proposed above ground slot mining from the current plan of 10 years to about 13-14 years.

Also, the additional coal intercepts have the potential to expand the resources across an additional 22 square kilometres of tenement holdings adjacent to the current JORC resource. Down dip extensions of resources have been confirmed.

There is an established JORC Reserve of 26.3 million tonnes thermal coal at the project based on detailed mining plans. Current drilling is expected to be completed in October.

Drilling has confirmed the presence of P1 Seam coal ranging in thickness from 0.98-1.47 metres. The company completed drilling along 500 metre centres during the season for a total of 2,500 metres in 20 rotary holes. Coal quality sampling will continue during the 2012 season.

Further drilling at the Duchess Paradise has also confirmed additional extensions to the P1 Seam resource with coal intersections in 38 holes for 5,800 metres, confirming further coal occurrences down-dip up to two and half kilometres to the east of the existing JORC Inferred Resource limits.
Kevin Wilson , managing director, said “these results suggest further support for our positive Feasibility Study by indicating that the proposed slot mining mine life may be extended as well as identifying further coal at depth. A resource re-calculation will be made in 2012 once all coal quality results have been received.”

The intercepts were confirmed with downhole geophysical and geological logging for each drillhole. P1 Seam thicknesses in this expanded region range from 1.23-1.82 metres. The intersections confirm the geological modelling and coal structure mapping.

In addition, a further five diamond drill holes and infill mud-rotary holes have been completed within the existing reserves for quality purposes.

On June 27 Rey completed the Definitive Feasibility Study (DFS) on the development Duchess Paradise, confirming it as economically robust and technically viable. Today's results add to the project's economics.

Cashflows are estimated at EBITDA $504 million over the first 5 years of sales against a market valuation of under $75 million. The project is likely to see Rey maximise the value of its large landholding in the Canning Basin.

Originally  published at: http://www.proactiveinvestors.com.au/companies/news/19815/rey-resources-duchess-paradise-coal-project-keeps-getting-bigger-and-better-19815.html