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Kuro Coal to acquire major coking coal project

September 4, 2014



ENP Newswire - 04 September 2014

Release date- 03092014 - Kuro Coal Limited, a wholly owned subsidiary of Atrum Coal NL (ASX: ATU), which is to be separately listed on the ASX under the code 'KCO' following an Initial Public Offering, is pleased to announce it has agreed to acquire up to a 70% interest in the Elan Coking Coal Project located in Alberta, Canada.

The acquisition will take place through a joint venture between Kuro and Elan.

Commenting on the joint venture, Atrum Coal Executive Director and Kuro Coal Non-Executive Director Mr Gino D'Anna stated: 'Atrum is solely focused on taking its world class Groundhog anthracite project through to production, so Kuro can provide Atrum shareholders with exposure to an exciting exploration venture as well as commodity and jurisdictional diversification. The Elan acquisition is an outstanding coking coal opportunity and fits Kuro's Canadian metallurgical coal strategy.'

The Elan acquisition includes 27 Alberta Crown Coal Lease applications covering a total area of approximately 23,000 hectares.

Commenting on the joint venture partnership, Elan Executive Director Gene Wusaty stated: 'This joint venture will provide Elan with the opportunity to become a tier one coking coal project. Alberta is ranked third by the Fraser Institute as the best mining jurisdiction worldwide and is host to some of the highest quality coking coal. We are excited to be working with the Kuro team.'

Elan Location

Elan is located in the foothills and front ranges of the Rocky Mountains of Alberta, approximately 30 km north of Coleman in Alberta. Historic work has divided the property into Savanna Creek, Isola Peak, Isolation Ridge, Isolation South (Oldman River or OMR), Wildcat (Cat Mountain) and Grassy North (Oldman River South) areas.

The Elan project comprises 27 Alberta Crown Coal Lease applications covering an area of approximately 22,951 hectares. In Alberta, coal lease applications provide the right to explore the land within the boundaries of the lease and are granted for a term of 15 years with an option to extend at expiry. Once the lease applications have been granted, Elan must pay an annual rent of $3.50/hectare to the Alberta government to retain the project, as well as royalties according to the Coal Royalty Regulation upon the commencement of commercial production. The necessary permits to undertake exploration are currently held by Elan.

The majority of the project can be accessed via paved highways as well as a system of limited use roads and access trails.

The development of ground access in and around the project area will allow the Company to undertake exploration with ground based drill rigs with minimal reliance on air support to conduct exploration and development.

Geology

Elan lies within the Front Ranges of the Canadian Rocky Mountains in the Crowsnest Pass area and spans the north-trending, west-dipping, Coleman, McConnell and Isolation thrust sheets. The Crowsnest Pass area is characterized by Jurassic to Lower Cretaceous rocks of the Fernie, Blairmore and Kootenay Groups, and the Crowsnest Formation.

Historical drilling on and near Elan suggests there are 10 to 16 coal seams that range from 3 to 10 m in thickness.

Additional drilling in the area will confirm the economic potential of these coal seams and the Company will prioritise the drilling to enable the completion of a pre-feasibility study at Elan. Coal rank is low to medium volatile bituminous with variable but generally moderate ash content, good washability, and good coking properties.

Coal Resources

The Property hosts a JORC compliant Indicated and Inferred Resource (in accordance with 2012 JORC guidelines) of 146.5Mt.

In addition to the current JORC Resources, Elan hosts an Exploration T Exploration T Exploration Target of arget of arget of 743Mt of low to medium low to medium volatile bituminous coal volatile bituminous coal that requires additional drilling prior to completing resource definition. This Exploration Target (under section 17 of the JORC Guidelines 2012) is based on drilling completed by previous explorers together with historical trenching, adits, mapping and sampling of coal outcrops across the project area.

The Exploration Target quantity and quality is conceptual in nature. There has been insufficient exploration to define a mineral resource and it is uncertain if further exploration will result in the Exploration Target being delineated as a mineral resource.

Grassy North, which falls within Livingstone Trend, has been identified as the primary exploration target. This target is located on the southernmost leases of the Property package and is proximal to established infrastructure.

Pursuant to the joint venture, over the next 6 months the Company plans to undertake a drilling program at Elan which will focus on twinning a select number of historical drill holes to confirm coal seam thickness and coal quality. This additional information will also assist the Company in confirming the Exploration Target with a view to using modern exploration techniques to convert a part of the Exploration Target into a mineral resource in accordance with JORC 2012 guidelines.

Previous Exploration & Development

Coal exploration on and around the Elan project began in 1949, extending to 1976. Additional exploration was completed between 1971 and 2002.

Project Infrastructure

The southern part of Elan is highway accessible by driving approximately 20 km north from Coleman via Kananaskis Highway. The northern part of the property can be accessed 42 km north of Coleman, via the Kananaskis Highway and the Oldman River Route. These routes provide maintained access to the limited-use road network that reaches, from south to north, the Isolation South (OMR), Isolation, and Savanna areas.

Transport to and from the property is by 4x4 truck and ATV.

A secondary Canadian Pacific rail line runs through Coleman and connects with the main CNR east-west line for access to Vancouver and Prince Rupert ports or as far as the Great Lakes eastwardly. The nearest airport is located in Pincher Creek, Alberta, approximately 50 km east of Coleman along Highway 3 (Crowsnest Hwy).

Accommodation, food, fuel and other necessary services are available in Coleman and Blairmore, Alberta, which are located 10 to 60 km south of the property. Coleman and Blairmore have a combined population of approximately 4,000. The local economy is primarily based on tourism, forestry, and coal-mining. Several coal mines, including Teck Coal and Coal Mountain mines, are currently in operation in the area.

Elan Acquisition Terms

Kuro has signed a binding Letter of Intent to acquire up to a 70% interest in Elan on the following terms:

Kuro will pay CAD$25,000 upon execution of a binding Letter of Intent;

To earn an initial 20% interest in Elan, Kuro will:

upon the execution of a formal and binding JV Agreement, pay the vendors CAD$150,000;

upon listing of Kuro on the ASX, issue the vendors 1,500,000 fully paid ordinary shares (subject to 24 months voluntary escrow) at a deemed issue price of $0.20 per share and

Kuro will allocate an initial $500,000 towards a 2014 exploration program;

Kuro will be entitled to further increase its interest in Elan as follows:

it can increase to 45% by:

spending at least CAD$2.5 million in exploration on Elan and

completing a Scoping Study.

it can increase to 60% by:

spending a further CAD$4 million in exploration on Elan; or

completing a Preliminary Feasibility Study.

it can increase to 70% by:

completing a Bankable Feasibility Study;

Kuro will issue fully paid ordinary shares (subject to 6 months voluntary escrow from the date of issue) upon the achievement of the following milestones:

400,000 fully paid ordinary shares upon the delineation of a 100Mt JORC Code compliant Indicated Resource of coking coal (up to 15% non-coking coal may be used in calculating resource under this milestone) to a depth not exceeding 300m at the Elan project, with verification to be completed by a Competent Person under the 2012 JORC Code guidelines to the absolute satisfaction of Kuro.

600,000 fully paid ordinary shares upon the delineation of a 200Mt JORC Code compliant Indicated Resource of coking coal (up to 15% non-coking coal may be used in calculating resource under this milestone) to a depth not exceeding 300m at the Elan project, with verification to be completed by a Competent Person under the 2012 JORC Code guidelines to the absolute satisfaction of Kuro.

800,000 fully paid ordinary shares upon the delineation of a 50Mt JORC Code compliant Measured Resource of coking coal (up to 15% non-coking coal may be used in calculating resource under this milestone) to a depth not exceeding 300m at the Elan project, with verification to be completed by a Competent Person under the 2012 JORC Code guidelines to the absolute satisfaction of Kuro.

1,000,000 fully paid ordinary shares upon the delineation of a 100Mt JORC Code compliant Measured Resource of coking coal (up to 15% non-coking coal may be used in calculating resource under this milestone) to a depth not exceeding 300m at the Elan project, with verification to be completed by a Competent Person under the 2012 JORC Code guidelines to the absolute satisfaction of Kuro.

Subject to completing a Bankable Feasibility Study, Kuro will retain a right of last refusal to acquire the remaining 30% interest in the Elan project on commercially acceptable terms;

Kuro is the Operator to the Joint Venture;

Mr Gene Wusaty will be appointed as a part-time consultant to the joint venture for a period of 2 years and will be paid a fee of CAD$75,000 per annum;

The Joint Venture Committee will consist of 50% representation by both Kuro and the vendors with the chairman being elected by Kuro. The chairman will have a casting vote and

The vendor of the Elan project shall have a free carried proportionate interest until the completion of the Bankable Feasibility Study, at which time each party will need to fund their proportionate expenditure, or dilute accordingly.

Panorama Anthracite Project

On 1 May 2014, Atrum announced that Kuro would develop the Panorama Anthracite Project ('Panorama') under joint venture. Atrum has subsequently reviewed the geological information for the Panorama region and its corporate strategy going forward. In light of Atrum's strategy to be the world's largest producer and exporter of high grade anthracite, it has decided to retain Panorama as it has the potential to contribute significantly to the overall multi-mine strategy. Kuro will not be developing Panorama.

Atrum will be undertaking exploration at Panorama as soon as a Notice of Works has been granted for the relevant coal licences.

IPO Timetable

Kuro has now completed all of its intended pre-listing acquisitions and considers that it has the right portfolio of exploration and development assets to progress its ASX listing. The Company will now move to update the required independent expert reports, revise the Notice of Meeting and revise the Prospectus in preparation for formal ASX listing in Q4 this year.

Atrum shareholders can expect to receive a Notice of Meeting by mail in the next three weeks three weeks three weeks which will outline the IPO timetable as well as set the Record Date. Atrum shareholders will be entitled to receive one free Kuro share for every four Atrum shares held at the Record Date.

We thank shareholders for their patience and look forward to delivering an exciting new venture for stakeholders.

Contact:

Kuro Coal Limited

Russell Moran

Chairman

Tel: +61 415 493 993

Email: russell@kurocoal.com

Gino D'Anna

Non-Executive Director

Tel: +61 400 408 878

Email: gino@kurocoal.com

Nathan Ryan

Investor Relations

Tel: +61 420 582 887

Email: nathan@kurocoal.com

Forward Looking Statements

This release includes forward looking statements. Often, but not always, forward looking statements can generally be identified by the use of forward looking words such as 'may', 'will', 'expect', 'intend', 'plan', 'estimate', 'anticipate', 'continue', and 'guidance', or other similar words and may include, without limitation statements regarding plans, strategies and objectives of management, anticipated production or construction commencement dates and expected costs or production outputs.

Forward looking statements in this release include, but are not limited to, the capital and operating cost estimates and economic analyses from the Study. Forward looking statements inherently involve known and unknown risks, uncertainties and other factors that may cause the company's actual results, performance and achievements to differ materially from any future results, performance or achievements.

Relevant factors may include, but are not limited to, changes in commodity prices, foreign exchange fluctuations and general economic conditions, increased costs and demand for production inputs, the speculative nature of exploration and project development, including the risks of obtaining necessary licences and permits and diminishing quantities or grades of resources or reserves, political and social risks, changes to the regulatory framework within which the company operates or may in the future operate, environmental conditions including extreme weather conditions, recruitment and retention of personnel, industrial relations issues and litigation.

Forward looking statements are based on the company and its management's good faith assumptions relating to the financial, market, regulatory and other relevant environments that will exist and affect the company's business and operations in the future. The company does not give any assurance that the assumptions on which forward looking statements are based will prove to be correct, or that the company's business or operations will not be affected in any material manner by these or other factors not foreseen or foreseeable by the company or management or beyond the company's control.

Although the company attempts to identify factors that would cause actual actions, events or results to differ materially from those disclosed in forward looking statements, there may be other factors that could cause actual results, performance, achievements or events not to be anticipated, estimated or intended, and many events are beyond the reasonable control of the company. Accordingly, readers are cautioned not to place undue reliance on forward looking statements.

Forward looking statements in this release are given as at the date of issue only. Subject to any continuing obligations under applicable law or any relevant stock exchange listing rules, in providing this information the company does not undertake any obligation to publicly update or revise any of the forward looking statements or to advise of any change in events, conditions or circumstances on which any such statement is based.


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Source: ENP Newswire


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