BANKABLE FEASIBILITY STUDY
Coalworks has initiated a bankable feasibility study (BFS) to determine a precise mine plan and provide a basis for project financing. Leading international engineers Minarco-MineConsult have been appointed to act as Study Manager of the BFS which is now underway for development of the Oaklands North Coal Mine. The CTL feasibility study, which envisages the coal mine supplying coal to a coal to petrol plant, will be a component of the BFS.

The scope of the BFS will include mine design, coal handling plant, mine facilities and infrastructure. A rail upgrade and operational plan will be developed as a component of the BFS. The study will deliver Capital Cost and Operating Cost estimates and Timeframe using a base case for the mining of 3Mt of thermal coal per annum via open pit at Oaklands, with other production options considered. The recent drilling program, which will allow the BFS to be based on a measured resource, resulted in an upgraded total resource of 822 million tonnes of JORC classified measured, indicated and inferred resources*.

*(See ASX announcement dated 5 November 2009)

MINING STRATEGY
Following the extensive results from drilling a mine optimization study was completed by Minarco MineConsult and an optimum mine development plan was formulated. A number of zones were evaluated and are under review.

INFRASTRUCTURE STRATEGY
In March 2009 Coalworks received a rail concept study to take coal to port by rail from Oaklands.

The rail study assumed production of 3 to 6 Mtpa of coal over 40 years of coal shipments.

Seven possible rail routes from Oaklands to various ports were identified and are being assessed with respect to potential capital costs and operating cost parameters, along with commercial parameters. The study also considered port options. As a result of this report Coalworks is focussing on two preferred routes:

• Oaklands to Port Kembla Coal Terminal
• Oaklands to Geelong Port

Coalworks concluded, based on the study, that Port Kembla was the lowest capex and opex port with existing coal handling facilities. However, if outside funding for an upgrade at Geelong Port was achieved then opex to Geelong Port is expected to be lower given its shorter haul distance. Accordingly, a working group has been formed in conjunction with key stakeholders with respect to rail and port logistics and coal handling facilities for the Oaklands to Geelong Port option.

POWER STATION
A previous study commissioned for Government by ACIL Tasman identified Oaklands as an ideal site for a power station due to its strategic location between Sydney and Melbourne. The existence of the 132Kva line running through EL6861 provides potential for upgrade to allow export of power from a new power station at Oaklands. The key issues which are under consideration for a power development are:

• The need for such a power station to be a new generation clean coal plant such as an IGCC plant
• A transmission study would be required
• Whether a power purchase agreement for offtake of power is required or whether reliance on spot sales on the National Electricity Market would be sufficient for project financiers to finance a power station consortium.

MARKETING
Asia Pacific Coal Market specialists, Wood Mackenzie, were appointed to conduct the Oaklands product pricing and market study. Wood Mackenzie provided expert, independent market assessments and product price forecasts for Oaklands’ thermal coal.

Already Coalworks has met with more than 30 potential coal offtake buyers from India, China, Korea, Japan and other countries who are interested in seeing the product coal. Potential terms are being discussed and, with the formulation of the optimum product coal from Oaklands, Offtake arrangements are set to be secured.

PROJECT SCHEDULE
 

ENVIRONMENTAL STUDIES
Coalworks is moving towards preparation of an Environmental Assessment which will be displayed to the public to exhibit Coalworks proposed mine development at Oaklands. This involves preparation of a number of technical studies in respect of flora , fauna, water studies etc which are underway now. These studies will then be collated into a Preliminary Environmental Assessment which functions as a consultative paper with key stakeholders in preparation for the main Environmental Assessment. This process is being performed in parallel with the BFS technical studies and will extract from the BFS the material features of the proposed mining operation, operations and management plans to allow the public to examine the measures which Coalworks proposes to protect the environment in developing and operating the proposed mine.

WATER STUDIES
Coalworks has commissioned Pennington Scott consultants to undertake comprehensive studies of dewatering and drainage for the Oaklands project. Dewatering studies are focusing on quantifying the timing and volume of dewatering and methods for reinjection of the water to groundwater with minimal impact to water systems. Flood studies are focusing on ensuring the minesite design has no impact on flood levels upstream and downstream of the project.

COMMUNITY RELATIONS
One of our key objectives is to keep the local community informed of progress at our coal projects. To this end, Coalworks regularly submits Oaklands progress reports to the Urana Shire Council which are included in the Urana Shire Council report to local residents.

The number of investors who receive emailed information updates from Coalworks is increasing which allows interested community stakeholders to remain informed of important announcements as they are reported to the ASX. Local media have also continued to report on progress at Oaklands.

LANDOWNER RELATIONS
Coalworks aims to form strategic partnerships with key Oaklands landowners. Constructive relationships with local landowners have been announced to the ASX as they are finalized and Coalworks senior management maintain ongoing communication with key landowner stakeholders.