Colonial Coal plans 2012 exploration of Canadian coal properties

Colonial Coal International Corp. (TSX VENTURE: CAD) said May 17 that it is continuing to mobilize for its planned 2012 drill programs on each of its 100%-owned Huguenot and Flatbed metallurgical coal properties in northeast British Columbia.

Huguenot Coal Project – Colonial has retained consultant Norwest Corp. to review recent exploration results and to prepare an updated National Instrument 43-101 technical report for the property’s main coking coal targets, which are contained within the Gates Formation coal measures. The technical report is intended to update all results previously reported for the property’s North Block and to more precisely delineate and update all prior material results for the Middle and South Blocks for which only historical information had been reported to date. Colonial has budgeted C$2.5m – $3m for additional exploration for 2012, with this field work to be initiated in early July. Environmental baseline studies and data collection are continuing, with this work budgeted at approximately C$650,000.

Flatbed Project – This project is located in northeast British Columbia about 20 kilometers southwest of the town of Tumbler Ridge in an area of past and current coal mining, including the Quintette and Trend coal mines. Colonial said it retains sufficient funds to proceed with a significant exploration program once coal licenses are granted and work permits are obtained.

Met coal reserves in British Columbia are getting a lot of attention right now as the Pacific Rim export market booms, albeit with a bit of a slowdown right now due to current world economic conditions.

  • Xstrata plc and a partner are putting together a major coal reserve play in the province based around acquisitions of First Coal and other properties.
  • Cardero Coal started the pre-application process May 9 at the British Columbia Environmental Assessment Office for a new coal mine with average annual production of 2.9 million tonnes of clean coal.
  • U.S.-based Walter Energy (NYSE: WLT) is a major player in the region due to its 2011 buy of Western Coal. Walter is looking at expanding existing mines. Plus it reported recently that the Willow Creek strip mine has primarily produced low-vol PCI coal up to this point, but over its entire life, starting soon, almost half of its production will be premium low-vol hard coking coal, which commands a higher market price.
  • Teck Resources (TSX: TCK.A and TCK.B, NYSE: TCK), already the biggest met coal miner in Canada, has been expanding existing mines. Also, a feasibility study for the re-opening of Quintette in northeast British Columbia is progressing and due for completion soon. Assuming things go as currently planned, the mine could be in production in the second half of 2013 with production ramping up through 2014 to about 3 million tonnes per year.

Huguenot features mostly mid-vol met coal 

A more complete description of Huguenot was offered in a March 30 financial report that Colonial Coal filed in Canada. “The Huguenot Coal Project is located approximately 690 kilometres north-northeast of Vancouver, close to the provincial boundary with Alberta. It is situated approximately 70 km south-southeast of the town of Tumbler Ridge and 115 km southwest of the city of Grande Prairie, Alberta. … Access into the project area is provided by a network of Provincial paved highways and unpaved, all-weather roads built for forestry and oil and gas exploration and development. Apart from these access routes, there is no major infrastructure in the vicinity of the project area. The property is located approximately 65 km southeast of a rail line (operated by CN Rail) that terminates at the Quintette Coal Mine load-out facility approximately 17 km south of Tumbler Ridge.”

A 2009 reserve evaluation showed that for coal that could potentially be mined by open pit methods, resources in the measured and indicated categories totaled 45.2 million tonnes. This resource estimate includes only the North Block of the Huguenot property, and does not take into account the Middle Block nor the South Block. These latter two areas were not drilled in 2008 but, together with the North Block, were the focus of considerable geological mapping and hand trenching, in addition to limited, widely-spaced drilling by previous property owners (Denison MinesGulf Canada Resources) between 1976 and 1979.

At Huguenot, the Gates Formation contains up to ten coal seams and coal zones (the term “coal zone” is applied to multiple, sometimes discontinuous, coal splits with intervening rock bands that form a distinct traceable horizon) numbered in ascending order from 1 to 10. The thickest is the No. 5 seam, which ranges between 3.29 and 6.77 meters. The main seams correlate directly with those to the northwest and southeast that are targeted for development by the Belcourt-Saxon Coal Limited Partnership. The Gates Formation coal seams of economic interest are typically of medium volatile bituminous rank, although two of the uppermost coal seams in the North Block are of high volatile bituminous A rank.

Said the Walter Energy website about Belcourt-Saxon: “The Belcourt and Saxon properties, containing significant undeveloped coal deposits, are located 65 to 125 kilometres south of Tumbler Ridge in northeast British Columbia. The Belcourt and Saxon coal properties are held in a joint venture (Belcourt-Saxon Coal Limited Partnership) with Western owning 50% and 50% owned by Peace River Coal Inc. The Belcourt property alone has production potential of 4.0 millon tonnes per year from a resource base of 171 million tonnes, of which 86 million tonnes are proven and probable reserves. … The Saxon property has additional potential based on historical studies which have not yet been updated to current standards as required by National Instrument 43-101. A further study of the Saxon property is required to understand the feasibility of the Saxon project.”

About Barry Cassell 20414 Articles
Barry Cassell is Chief Analyst for GenerationHub covering coal and emission controls issues, projects and policy. He has covered the coal and power generation industry for more than 24 years, beginning in November 2011 at GenerationHub and prior to that as editor of SNL Energy’s Coal Report. He was formerly with Coal Outlook for 15 years as the publication’s editor and contributing writer, and prior to that he was editor of Coal & Synfuels Technology and associate editor of The Energy Report. He has a bachelor’s degree from Central Michigan University.