Mamahak?s coal resources increase 33%

By Ruli Setiawan

ASX-listed Kangarroo Resources announced on Tuesday a significant increase in the coal resources of the PT Mamahak Coal Mining (MCM) coal concession in West Kutai Regency, East Kalimantan owned by the firm through its Indonesian holding entity PT Karsa Otima Jaya (KOJ).

The increase in the coal resources is identified based on the results of additional drilling and sampling work carried out in 2013 and 2014.

It said the review by independent consultants PT New Resource Mine Consulting (NRM) and a new JORC Code 2012 Mineral Resource Statement which was prepared and issued in March 2015 identifies an overall 33 percent increase in Coal Resources at the MCM mining concession since the last JORC statement was issued on behalf of by PT SMG Consultants (SMGC) in February 2011.

This ?Statement of Open Cut Coal Resources? produced by NRM covers the southern part of the MCM concession covering an area of 1,439 Ha where drilling has been focused.

The coal resources estimated for the MCM deposit total 14.0 million tonnes (Mt), of which 1.6 Mt is categorised as Measured, 8.3 Mt is categorised as Indicated with the balance of 4.1 Mt as Inferred. In the West Block, coal resources have been estimated to elevation minus 50 m, and in the East Block to elevation 0 m (Note: different elevation cut-offs are due to variance in average topography between blocks). coal resource estimates excluded coal seams less than 0.20 m in thickness and use an estimated in situ RD that is calculated from the air dried RD and using the Preston-Sanders (1993) conversion formula to convert to an in situ RD using Total Moisture (TM.) Coal resources totals have been rounded to the nearest 0.10 Mt to reflect the order of accuracy of the estimate.

The coal resources by block are summarized

Block	Coal Resources (Mt)				Basal	TM %	Ash %	TS %	CV kcal/kg		RD g/cc
	Measured	Indicated	Inferred	Total	RL	(ar)	(adb)	(adb)	(gar)	(adb)	(In situ)
West	0.5	4.1	2.0	6.6	‐50	5.3	12.4	1.75	7,000	7,235	1.34
East	1.1	4.2	2.1	7.4	0	4.2	10.5	1.43	7,185	7,345	1.32
TOTAL	1.6	8.3	4.1	14.0		4.8	11.6	1.62	7,080	7,285	1.33

Current versus Previous Coal Resource Estimates

		Coal Resources (Mt)				Coal Quality
		Measured	Indicated	Inferred	Total	TM %	Ash %	TS %	CV kcal/kg
						(ar)	(adb)	(adb)	(gar)
Feb‐15	NRM	1.6	8.3	4.1	14.0	4.8	11.6	1.62	7,080
Aug‐11	SMGC	6.9	3.1	0.5	10.5	3.2	9.2	1.62	7,420
VARIANCE		‐5.3	5.2	3.6	3.5	1.6	2.4	0	‐340

A summary of material information related to the ?Statement of Open Cut Coal Resources? is provided as follows:
- Geology and geological interpretation:- Mamahak lies within the western part of the Kutai Basin which is comprised of a series of Tertiary Sedimentary rock from Eocene to Pliocene age. The Kutai Basin commenced deformation in the Middle Eocene. Geological interpretation is based on drilling data combined with regional geological information, topographical features (lineaments) and coal quality analyses.
- Sampling and sub-sampling techniques:- All core lithology was logged in the core barrel splits to minimise disturbance of the sample and avoid coal loss due to unnecessary additional handling. The core was photographed before being wrapped in plastic and sealed to preserve the coal properties. Non?coal partings greater than 0.07 m were sampled separately, these were secured in separate sealed plastic bags. Coal sampling has been undertaken on a ply-by-ply basis. Only analysis from cores with recovery above 90% has been used in modelling and resource estimation. Coal sampling procedures were commensurate with international standards and all core analysed in internationally certified laboratories to appropriate standards.
- Drilling techniques:- Drilling was by conventional rotary methods using water/drill mud for drill circulation. Data includes both full and touch/partly coring in addition to open-hole drilling.
- The criteria used for classification, including drill and data spacing and distribution:- The determination of resource categorization is based on coal seam continuity in terms of thickness, quality and structural complexity. Other nongeological boundaries considered include geographical (e.g. major drainage system), legal (forest boundaries, major infrastructure) and social (major towns). Spacing line of drilling is approximately 50m to 150m which is considered adequate for classification of Coal resources to Measured and Indicated categories.
- Sample analysis method:- A number of ?twin? cored holes were submitted for analytical test-work. Analyses typically include Total Moisture, Proximate Analysis, Total Sulphur, Calorific Value and Relative Density (stage1 test-work) and stage2 test-work including Ultimate Analysis, Ash Analysis, also basic coking property testing, including Crucible Swelling Number (CSN).
- Estimation methodology:- A computer model was created using Ventyx ?Minescape? software, a surface modeling technique designed specifically for coal seam modeling. The individual coal seams were correlated using geophysical logs and seam depth and thickness determined by reconciliation of coal cores with geophysical logs. Only drill-holes with geophysical logs were used for modelling and resource estimation.
- Cut-off grade(s), including the basis for the selected cut-off grade(s):- Cut-off parameter for resources boundary limited by minimum coal thickness up to 0.20 m, no coal resources reported below minus 50 m RL in the west block and below 0 m RL in the East Block. Coal resources were also limited by the concession boundary, topography boundary and by the depth of weathering.
- Mining and metallurgical methods and parameters:- The mining method used previously at Mamahak was conventional open pit mining using backhoe style hydraulic excavators loading off highway dump trucks for both waste and ore mining. In determining Mineable Coal (non-JORC) reasonable factors have been used for roof and floor loss, dilution and minimum coal parting thickness as well as diluting material properties. Coal quality is as per the geological model combined with loss, dilution and moisture adjustments.

Coal Reserves at current depressed coal prices are currently estimated at NIL therefore no Coal Reserves Statement has been prepared, however the ?Statement of Open Cut Coal Resources? also includes a sensitivity analysis showing indicative Mineable Coal (non JORC) which has been estimated separately for the 2 main mining blocks in MCM using benchmark thermal coal prices ranging from US$70 to US$110. The outcomes of the sensitivity study are shown in Table 3 below.

Block	Benchmark Coal Price @ 6,322 kcal/kg (gar) ? US$/t	Project Coal Price @ 6,870 kcal/kg (gar) ? US$/t	Breakeven Strip Ratio (BESR) (bcm/t)	Waste (Mbcm)	Coal (Mt)	Average SR (bcm/t)
West	70	78.7	13.6	0.0	0.0	0.0
	80	89.1	17.0	9.6	0.6	17.3
	90	99.4	21.0	14.1	0.8	17.9
	100	109.7	23.9	20.2	1.1	19.1
	110	120.1	27.3	32.1	1.5	21.0
East	70	76	12.7	4.6	0.4	12.4
	80	86.9	16.3	7.3	0.6	13.1
	90	97.8	20.4	17.4	1.1	15.9
	100	108.7	23.5	39.6	2.0	19.5
	110	119.6	27.2	48.2	2.4	20.4

This latest geological modelling work and the corresponding ?Statement of Open Cut Coal Resources? at 28 Feb 2015 prepared by NRM provides the Company with more accurate information and a much higher level of confidence with which to plan the future development of MCM.

Editing by Johannes Simbolon