Coalworks owns the Vickery South coking and export thermal coal near Gunnedah. The initial phase of drilling has delineated a JORC inferred 42 Million tonne coal resource. This resource occurs in the eastern zone of Coalworks licence area and displays shallow coal with good coking coal potential. Coalworks intends to now proceed to a preliminary feasibility study for the production of export coking and thermal coal via an open pit mine with coal railed to Newcastle for export. The company’s resource target of 50 to 70 million tonnes of semi soft coking coal and high quality export thermal coal remains the current objective. A second phase of drilling to support the preliminary feasibility study is planned. On 30 April 2010 Coalworks signed a Joint Venture Farm in with ITOCHU Energy & Mineral Australia Pty Ltd a subsidiary of trading conglomerate ITOCHU Corporation providing for ITOCHU to contribute up to $11 million to earn 49% by the completion of a bankable feasibility study. An offtake and marketing agreement is envisaged where ITOCHU will purchase or arrange sale for the expected coking and thermal coal from the project. ITOCHU, whose turnover exceeded US$34 billion in 2008/9, has extensive experience in developing and investing in coal mines in Australia and marketing and selling coal.

The deposit is south of Whitehaven’s operating coal mines and is in a highly sought after mining province. In addition Whitehaven has acquired the adjoining Vickery coal project which previously produced coal when it was owned by Coal & Allied. Nearby rail is available in the area which already takes Whitehaven’s coal to the Port of Newcastle.