Coal

Rey holds coal tenements in the Canning Basin, Western Australia. Exploration has identified a number of substantial coal deposits across the tenements, including the Duchess Paradise JORC resources and reserves.

Development of the Duchess Paradise deposit was the subject of a positive Definitive Feasibility Study (DFS) completed in 2011, based on a bituminous thermal coal mine exporting up to 2.5 million tonnes per annum, well situated to feed the Asian market for power generation. The proposed mine, 175 km by road south-east of Derby, including a coal handling and preparation plant and an access road to the Great Northern Highway, which connects to the Derby Highway and Derby Port.

P1-seam Reserves Estimates for Proposed Duchess Paradise Mine Plan – October 2014 (JORC 2012 Code)

Mining typeProvedProbableTotal
Reserves (ROM Tonnes)1
Slot Excavation2,016,000495,0002,510,000
Highwall Mining18,427,0005,333,00023,760,000
Total20,442,0005,828,00026,270,000
Marketable Cleaned Tonnes (ar)2, 3
Slot Excavation1,363,000334,0001,697,000
Highwall Mining12,480,0003,612,00016,093,000
Total13,843,0003,947,00017,790,000 4

1 (ROM) run of mine.
2 (ar) as received.
3 Average Mine Recoveries and Yields to generate Marketable Cleaned Coal tonnages is presented in Table below. A&B Mylec calculated a 67.3 percent wet yield based on coal quality data from 60 cored holes and seam thickness data from 380 available drill holes, as reported in the A&B Mylec 2011 DFS report (Including 2011 DFS report Addendum). The stated seam thickness data was supplied by Marshal Miller & Associates (now Cardno) for use in the 2011 DFS report Addendum.  No further works has been completed by A&B Mylec since the completion of these 2011 works.  Marshall Miller & Associates supplemented the thickness database with the available drill holes (385 holes) to derive a weighted average 67.7% wet yield.
4 An additional 2.7 million marketable cleaned tonnes (ar) derived from inferred resource are included in the mine plan, which totals 20.5 million tonnes (ar).

 

P1-seam Marketable Cleaned Coal Estimate Derivation Factors – October 2014 (JORC 2012 Code)

TypeAverage Mine Recovery (%) Total Run of Mine Coal (ar)1(Mt)2Wet Yield based on Expected Total Moisture (%)3Marketable Cleaned Coal4 (ar)1 @ 17.3 % Total Moisture (Mt) 2
Slot Excavation952.567.61.7
Highwall Mining5123.867.716.1
Total26.367.7 317.8

1 (ar) as received.
2 (Mt) million tonnes.
3 A&B Mylec calculated a 67.3 percent wet yield based on coal quality data from 60 cored holes and seam thickness data from 380 available drill holes, as reported in the A&B Mylec 2011 DFS report (Including 2011 DFS report Addendum). The stated seam thickness data was supplied by Marshal Miller & Associates (now Cardno) for use in the 2011 DFS report Addendum.  No further works has been completed by A&B Mylec since the completion of these 2011 works.  Marshall Miller & Associates supplemented the thickness database with the available drill holes (385 holes) to derive a weighted average 67.7% wet yield.
4 an additional 2.7 million marketable cleaned tonnes (ar) derived from Inferred Resources are included in the mine plan, which totals 20.5 million marketable cleaned tonnes (ar).

Reserves are included in the following Resources statement.

Duchess Paradise P1-seam Resources – October 2014 (JORC 2012 Code)

Duchess Paradise Resources Estimate (in-place, with in situ moisture) Million Tonnes
MeasuredIndicatedInferred
(Interpolated)
Inferred
(Extrapolated)
Total
Inferred1
Total

60.278.551.3115.7167.1305.8

1 Difference in Total Inferred Resources due to rounding
For further information on the above summary Reserves and Resources estimate, please refer to the Company’s ASX announcement dated 28 October 2014.

Competent Persons Statements

 Coal

 Coal Quality
The coal quality information in this report was compiled under the supervision and reviewed by Mr. Andrew Meyers, who is a Fellow of the Australasian Institute of Mining and Metallurgy (Member since 1993) and Director of A&B Mylec Pty Ltd, metallurgical and coal technology consultants. Mr. Meyers has more than 20 years’ experience in coal processing for coal projects and coal mines both in Australia and overseas. With this level of experience, he is adequately qualified as a Competent Person as defined in the December 2012 edition of the “Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves” (The JORC Code, 2012 Edition).

Coal Resources Estimate
Estimate of P1-seam Resources in the Duchess Paradise area is in accordance with:

  • “The Australian Guidelines for Estimating and Reporting of Inventory Coal, Coal Resources and Coal Reserves” – 2003 Edition prepared by the Coalfields Geology Council of New South Wales and the Queensland Mining Council;
  • JORC Code, 2012 Edition, and as adopted by the Australian Stock Exchange; and
  • ASX Companies Update 03/07 and the JORC paper of June 19th 2007, Guidance for Practitioners.

The P1-seam Resources estimate and discussion presented in this report is based on information supplied by Rey Resources or by companies employed by Rey Resources, as well as information collected during exploration activities under the guidance of Rey Resources.  The information has been reviewed by Mr. K. Scott Keim, C.P.G., Area Manager, Senior Principal for Cardno, and Mr. Ronald H. Mullennex, C.P.G., C.G.W.P., Senior Principal for Cardno.

Mr. Keim has over 32 years of experience in coal-related work, including but not limited to coal exploration and coal reserve/resource estimation. He is a member of the Society of Mining, Metallurgy, and Exploration (SME), which is part of The American Institute of Mining, Metallurgy, and Petroleum Engineers (AIME).  He is also a member of the American Institute of Professional Geologists (AIPG), member of the Board of Directors of The Penn State Research Foundation, and on the Advisory Board to the Virginia Center for Coal and Energy Research, affiliated with the Virginia Polytechnic Institute and State University.  Mr. Keim holds a Bachelor of Science degree from The Pennsylvania State University.  His education and experience qualify him as a Competent Person as defined in the JORC Code, 2012 Edition.

Mr. Mullennex has over 40 years of experience in diverse geologic and hydrogeologic applications related to all aspects of coal geology.  One of his specific areas of expertise involves application of stratigraphic and deposystem analysis to coal resource and reserve delineation and mineability determination.  Mr. Mullennex is a member of the American Institute of Professional Geologists, the Association of Engineering Geologists, the Geological Society of America (Coal Geology and Hydrogeology Divisions), SME of AIME, Association of Ground Water Scientists and Engineers (division of National Ground Water Association), International Mine Water Association, and the American Society of Mining and Reclamation.  Mr. Mullennex holds both Bachelor of Science and Master of Science degrees in Geology from West Virginia University.  He serves on the Visiting Committee for the Department of Geology and Geography at WVU.  His education and experience qualify him as a Competent Person as defined in the JORC Code, 2012 Edition.

Coal Reserves Estimate
Estimate of P1-seam Reserves in the Duchess Paradise area is in accordance with:

  • “The Australian Guidelines for Estimating and Reporting of Inventory Coal, Coal Resources and Coal Reserves” – 2003 Edition prepared by the Coalfields Geology Council of New South Wales and the Queensland Mining Council;
  • JORC Code, 2012 Edition, as adopted by the Australian Stock Exchange; and
  • ASX Companies Update 03/07 and the JORC paper of June 19th 2007, Guidance for Practitioners.

The P1-seam Reserves estimate and discussions presented in this report are based on information supplied by Rey Resources or by companies employed by Rey Resources, as well as information collected during exploration activities under the guidance of Rey Resources.  The information has been reviewed by Mr. Gerard Enigk, B.S.M.E., P.E., Manager of Engineering for Cardno and Mr. Peter Christensen, Mining Vice President for Cardno.

Mr. Enigk has over 37 years of experience in coal-related work, including but not limited to coal reserve/resource estimation, mine planning and design, mine operations, mineral valuation and appraisals, and geotechnical evaluations. He is a Registered Member of the Society of Mining, Metallurgy, and Exploration (SME), which is part of The American Institute of Mining, Metallurgy, and Petroleum Engineers (AIME).  Mr. Enigk holds a Bachelor of Science degree in Engineering of Mines from The Pennsylvania State University and a Master’s degree in Environmental Science from the West Virginia Graduate College, and is a Registered Professional Engineer in West Virginia.  Mr. Enigk has served in the capacity as Manager of Engineering and as a production supervisor for operating coal companies, and has extensive experience with surface and underground mining operations, including the use of highwall mining systems.  Mr. Enigk is a certified mine foreman in West Virginia.  His education and experience qualify him as a Competent Person as defined in the JORC Code, 2012 Edition.

Mr. Christenson has over 28 years of experience in underground and surface coal mining including the use of highwall mining systems.  He is a member of the Society of Mining, Metallurgy, and Exploration (SME), which is part of The American Institute of Mining, Metallurgy, and Petroleum Engineers (AIME).  He is also a member of the Australasian Institute of Mining and Metallurgy, the Rocky Mountain Coal Mining Institute, the Denver Mining Club, and the Denver Coal Club.  Mr. Christensen is a certified underground mine foreman in New Mexico.  Mr. Christensen holds a Bachelor of Engineering degree in Mining Engineering from University of Queensland, Australia.  He has broad international mining experience in open cut, underground and highwall coal mining.  He has held various senior positions with major mining companies and service providers including roles of engineering manager, operations manager, project manager and statutory responsibility as Site Senior Executive in Queensland, Australia.  His experience includes managing feasibility studies, new mine development, mining method and equipment selection, mine planning and cost estimation.  He has conducted economic and financial evaluations of mining operations as well as audits and reviews of mining practices, cost structures and operating performance.  He has also developed and implemented safety management systems.  His education and experience qualify him as a Competent Person as defined in the JORC Code, 2012 Edition.

The information concerning Duchess Paradise P1Seam Reserves and Resources Estimate was first reported to ASX on 28 October 2014 in a report entitled “Duchess Paradise P1-seam Coal Resources and Reserves Updated to JORC 2012” and is available to view on the Company’s website. The Company confirms that it is not aware of any new information or data that materially affects the information included in the original market announcement and, in the case of estimates of Coal Reserves and Resources that all material assumptions and technical parameters underpinning the estimates in the relevant market announcement continue to apply and have not materially changed. The Company confirms that the form and context in which the applicable Competent Person’s findings are presented have not been materially modified from the original market announcement.