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    ATU   AU000000ATU1

ATRUM COAL LIMITED

(ATU)
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Atrum Coal : 97Mt Increase in Isolation South Resource

12/03/2019 | 09:55am EDT

Atrum Coal Ltd (Atrum or the Company) (ASX: ATU) is pleased to provide an update on its 100%-owned Elan Hard Coking Coal Project (Elan Project) in southern Alberta, Canada.

Managing Director, Max Wang, commented: 'This substantial Isolation South resource upgrade further demonstrates the scale potential of the overall Elan Project. The Isolation South area presents one of several Tier 1 hard coking coal development opportunities within the Elan Project. It offers the strong potential for attractive open-pit project economics due to its shallow and thick coal seam deposition. Initial pit optimisation and mine planning work has already commenced on Isolation South, running in parallel with the flagship Elan South development.'

Isolation South Resource Estimate Increased by 97 Mt to 217 Mt

Following the comprehensive exploration campaign that commenced at the Isolation South in August 2019, a significant geological data set has been acquired. Subsequent processing and geological interpretation by Atrum and its key geological consultant, Palaris, has resulted in construction of a 3D geological model that underpins the updated resource estimate. This geological model will continue to be updated as further results become available from ongoing drilling in the Isolation South area.

Based on the drilling results and geological data available to late November 2019, a revised resource estimate of 217 Mt has been estimated for Isolation South. Of this total 217 Mt resource, 79 Mt has been classified as Indicated and 138 Mt as Inferred.

The northern area, also known historically as Cabin Ridge, is a dip slope (where seams follow the topographical surface) and it contains an updated resource estimate of 198 Mt. The southern area is a smaller dip slope, situated on the southern side of the Oldman River, and the resource of 19 Mt is a maiden estimate for this area.

Continued Drilling Success Delivers Further Resource Upside Potential

In 2019, a total of 43 rotary air blast holes have been completed at Isolation South by 27 November 2019. This complements the 19 historical HQ size cored holes that were drilled by Scurry Rainbow Oil in the 1970's. This has reduced the drill hole spacing to < 100m to 250 metres between boreholes at the Cabin Ridge area.

Drill holes located in the area of structural thickening (including Holes 38 to 44) have encountered very thick coal seams in the Seam 3 group of seams, with total cumulative apparent coal thicknesses ranging from 48.4 to 104.7 metres. The geological model that underpins the updated resource estimate incorporates results up to and inclusive of Hole 41. As such, the more recent results present significant further resource upside potential once the zone of thickening in this area is delineated further. Drilling in the Isolation South area remains ongoing.

Geology of the Isolation South Area

Isolation South is located approximately 20 km north of the flagship Elan South area. Historically referred to as the Oldman River Prospect, the main target area at Isolation South occurs on Cabin Ridge, on the McConnell Thrust fault and bounded to the west by the Twin Ridge Thrust. The Oldman River flows south-east through the Isolation South area and dissects it into northern and southern areas.

The coal seams at Isolation South dip to the west at relatively moderate angles (around 20 degrees). The dip angle of the coal seams mimics the topographical surface and represents a dip slope on the western slope of the ridge. Seam outcrops are prevalent on the eastern side of the ridgeline.

The coal seams outcrop near the surface location of the McConnell Thrust fault and in a crescent shaped cropline due to a topographical depression midway along Cabin Ridge. East of the McConnell Thrust, the seams occur at depth through a series of unnamed synclines and anticlines within the central and eastern parts of the Isolation South area.

Target Seams and Structural Thickening

Isolation South contains four main seam groups that have been correlated with high confidence into the plies of Seam 1, Seam 2, Seam 3 and Seam 4 groups. Where intersected, the full sequence of coal seams can present more than 40m of cumulative coal thickness (apparent), without any structural thickening evident.

Seams 1 and 2 are shown to be relatively uniform from one drill hole to the next and are not impacted by structural thickening, whereas Seam 3 is thickened as the result of structural deformation. This characteristic of structural thickening in Mist Mountain coals is well documented at nearby projects including Grassy Mountain. The structural thickening appears to be the result of low angle thrusting and compression, with the thick Seam 3 package representing a major plane of weakness in the strata. As a result, the Seam 3 group achieves apparent thicknesses ranging from 30 metres to in excess of 100 metres, in a north-south trending zone on Cabin Ridge.

Exploration

A total of 62 holes have been drilled to date at Isolation South, 43 of which have been completed by Atrum in 2019. The vast majority of holes drilled at Isolation South in 2019 (35 of 43 drilled) have been moderately inclined to the east (at 25 degrees from horizontal) at an azimuth of 75 degrees to account for the moderate westerly dipping seams, so that coal seam intersections are as close to true thickness as possible. All boreholes detailed in this release have been geophysically logged by Century Wireline Services with a suite of tools including natural gamma, caliper, long and short spaced density, resistivity, deviation and dipmeter. The main focus of the current drilling at Isolation South, including 35 of the holes drilled in 2019, has been north of the Oldman River on Cabin Ridge. This northern area is where 198 Mt of the updated resource is defined.

Scurry-Rainbow Oil Limited (Scurry) undertook exploration of the Isolation South area in 1970. Exploration activities included bulldozer-assisted trenching, establishment of 22.5km of access roads and 19 HQ size fully cored holes for a total of 3,286m of coring. 16 hard-copy wireline logs from the 19 holes drilled by Scurry were professionally scanned to electronic LAS files in order to enable high confidence in seam interval depths and detailed seam correlation.

Core samples from historical core holes were subjected to raw coal quality testing and clean coal testing at CF1.50, with average core recovery estimated at 79% (providing a reasonable dataset). Scurry also completed excavation of 10 adits, with bulk samples subjected to raw and washability testwork. Scurry concluded that there was a significant deposit of potentially open cut mineable hard coking coal at Isolation South.

Coal Quality

Core samples collected from HQ (63mm diameter) cored boreholes were dispatched to ASTM accredited laboratories in Canada for coal quality testing. Raw coal and clean coal composites were typically tested for proximate analysis, FSI, total sulphur (TS) and calorific value (BTU).

Sizing and float sink and other detailed washability and coke characterisation testwork was quite comprehensive on both core samples and bulk samples extracted from adits driven into coal seams at Isolation South. Mean maximum vitrinite reflectance (RoMax %) is expected to be >1.20% based on the results of regional coal bed methane well testing and results from the Isolation area.

Historical testing of clean coal composites at CF1.50 has typically produced coal with good coking properties with moderate to high FSI (up to 9), low total sulphur (0.20% to 0.60%) and low ash content (6% to 10% ad), indicating low inherent ash in the coal1 . Theoretical yields at CF1.50 were in the range of 57% to 72% from 49 samples of various seams. Atrum plans to extract large diameter cores at Isolation in 2020 to further validate the coal quality and potentially develop a product specification.

Data and Modelling

The 2019 exploration program was planned and managed by Atrum following industry best practice. This includes use of independent third-party specialty contractors for drilling, geophysical logging and lab testing. A 3D geological model has been constructed using Dassault Systems Geovia Minex modelling software. The co-ordinate system used for geological modelling and GIS systems is the NAD1983 Universal Transverse Mercator (UTM), Zone 11N. The structural model was created using the borehole collar data and seam intersections compiled in the Minex borehole database, based on the geological data provided by Atrum. The collaborative approach between Atrum and Palaris provided significant confidence in the development of the geological model.

The geological model that underpins the resource estimate has been updated inclusive of Hole 41. Holes 43 and 44 have cumulative apparent coal thicknesses in excess of 100 metres, and will be included in future updates after ongoing drilling further delineates the zone of structural thickening in this area.

Structure grids are based on 25m mesh (grid cell) size with a scan distance of 2,000 metres. Resource classification was undertaken using a maximum spacing of 0 500m between cored coal quality boreholes for Indicated resources, and beyond 500m of a cored borehole for Inferred resources (extrapolation distances are usually limited to

Further Resource Estimate Detail

The November 2019 Isolation South coal resource estimate is reported in accordance with the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves (The JORC Code), 2012 Edition. The updated Isolation South resource estimate (as at 30 November 2019) totals 217 Mt, of which 79 Mt is classified as Indicated and 138 Mt is classified as Inferred.

Contact:

Max Wang

Tel: +1 403 973 3137

Email: mwang@atrumcoal.com

(C) 2019 Electronic News Publishing, source ENP Newswire

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