Blackham Resources increases lignite coal resource at Scaddan Energy Project, WA

Australian energy company, Blackham Resources (ASX: BLK), has continued to advance the development of the Scaddan and Zanthus Energy Projects, located near Esperance, Western Australia.

The Scaddan lignite resource has increased to 860 million tonnes. The combined Scaddan and Zanthus Energy Projects contain 1.2 billion tonnes of lignite containing 9,200 PJ of energy at shallow depth.

The drilling confirms an increase in the energy content of the Scaddan resource.

The projects have the potential to produce 600 million barrels of petroleum products, consisting mainly of a clean diesel, as well as additional power available for sale into the grid.

The Scaddan Energy Project is surrounded by complimentary infrastructure approximately 60 kilometres north of the town and major port of Esperance and 10 kilometres east of the Esperance to Kalgoorlie highway, gas pipeline and railway line.

Blackham and its JV participant’s landholdings in the Esperance region are in excess of 200,000 hectares.

Runge Limited was engaged to review the borehole data for the Scaddan lignite deposit and provide a resource statement in accordance with the JORC1 reporting standards.

Runge is an internationally respected global consulting company providing resource and mining consulting services and software for more than 30 years.

Blackham currently manages a combined lignite resource of 1.2 billion tonnes estimated in accordance with the JORC Code. Blackham’s attributable resource, taking into account the 70% interest in the Scaddan lignite deposit and the 100% owned Zanthus deposit, is 950 million tonnes of lignite.

Existing borehole data at Scaddan was previously reviewed by Runge to calculate the resources contained within the tenements. The data from the drill programmes completed in November 2008 and October 2009 has now been included in the reported resource estimates.

Confidence in the resource has increased significantly with 500 million tonnes (58%) of the resource now in the measured and indicated categories.

The resource estimate is on a 56% moisture basis and an approximate relative density of 1.2. No thickness or quality cut-offs were applied to the Resource Estimate due to the lignite having reasonable prospects for eventual economic extraction as outlined in the Australian “Guidelines for Estimating and Reporting of Inventory Coal, Coal Resources and Coal Reserves”.

Exploration drilling to define the Scaddan lignite deposit is based upon the historical drill holes and recent 2008 and 2009 drilling programmes. It includes a total of 1,481 boreholes, 245 of which cored, and 1,236 drilled as open holes.

Further drilling is required to confirm a possible extension of the Scaddan West deposit to the north.

The Scaddan deposit now appears to extend over 34 kilometres in length and is up to five kilometres wide in places. The main control on the thickness of lignite is the basement topography, with thick zones in areas of topographic lows, and thin or absent zones around topographic highs.

Thickness in the Scaddan West area varies from up to 16m, thinning rapidly at the edges of the body and around topographic highs. The main seam LGA averages 8 metres in thickness.

An estimate of inventory coal was also prepared by Runge based upon the drill hole data, totalling an additional 360 to 460 million tonnes.

Drilling of several quality holes of a spacing of no more than 2,000m should readily convert most of the inventory area to an Inferred Resource as there is reasonable confidence in the structural continuity of the lignite from previous drill holes.

Based on the depth and thickness of the resource the Scaddan lignite deposit would be suitable for extraction by open cut methods, as it lies at depths generally between 25 and 30 metres with an average cumulative coal thickness of 8 metres.

The shallow depth and generally unconsolidated sediments overlaying the seam makes the deposit amenable to large scale open pit mining methods.

Blackham intends to use the latest resource data for initial mine designs and planning purposes. This mining study should significantly improve Blackham’s understanding of the feedstock cost for a CTL operation.

The Zanthus project is located on the western margin of the Eucla Basin.  The lignite resource at Zanthus is made up of two main lignite bodies that are part of a sedimentary unit deposited during the Tertiary period into north, northeast – south orientated depressions in the underlying basement.

Runge was also commissioned by Zanthus Energy Pty Ltd, a 100% owned subsidiary of Blackham, to review the geology and resources of the Zanthus lignite deposit.

This entailed reviewing the drilling data, creation of geological and coal quality models and reporting of a resource estimate. A Resource Estimate was completed for the Zanthus lignite deposit and is reported in accordance with JORC1.

Based on the depth and thickness of the resource the Zanthus lignite deposit would be suitable for extraction by open cut methods as it lies at depths generally between 15 and 50 metres with an average cumulative coal thickness of 7.9 metres.

The shallow depth and generally unconsolidated sediments overlaying the seam makes the deposit potentially amenable to large scale open pit mining methods.

The Company have planned an infill drilling campaign for the Zanthus project. The permit of work has been lodged with the Department of Mines and Petroleum and heritage surveys are being organised to allow for a drill program to take place in the near future.

Blackham currently controls a combined lignite resource of 1.2 billion tonnes estimated in accordance with the JORC Code. Blackham’s attributable resource, taking into account the 70% interest in the Scaddan lignite deposit and the 100% owned Zanthus deposit is 950 million tonnes of lignite.

The Scaddan and Zanthus Projects contain 1.2 billion tonnes of lignite containing over 9,200 PJ of energy on and potential for 600 million barrels of oil products mostly in the form of ultra clean diesel.

There is also additional production potential from the existing coal inventory which is estimated at 0.82 to 1.22 billion tonnes of lignite at Scaddan and Zanthus projects.

The scoping study completed in November 2008 was based upon a 15,000 barrel per day operation producing 4.8 million barrels per annum.

The Scaddan measured and indicated resource equates to 50 years worth of potential feedstock for a 15,000 barrel per day CTL facility. Infill drilling of the Scaddan and Zanthus inferred resources may allow for the CTL facility to increase in scale.