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COAL FE RESOURCES LIMITED
QUARTERLY REPORT
For the period ended
31 December 2007
Highlights
• Completed geological due diligence on proposed
acquisition of PT Nusantara Thermal Coal (NTC).
• Ongoing drilling program for the Abadi Project with
six (6) drillhole results yielding encouraging results.
• Undertaking a feasibility study to assess the social and
economic issues of Kilisuci Project.
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INTRODUCTION
The December Quarter saw the Company in the midst of completing its surveying
activities on its projects and completing its geological due diligence exercise on its
proposed acquisition of 60% of NTC from PT Bungo Raya Nusantara (“BRN”).
Major activities during the quarter were as follows:
o Geological due diligence fieldwork on NTC acquisition has been completed
and final reports were submitted to CES end January 2008.
o Ongoing drilling program for the Abadi Project with six (6) drillhole results
yielding encouraging results.
o Undertaking a feasibility study to assess the social and economic issues of
Kilisuci Project.
Overall, activity for the quarter was dominated by the commencement of the drilling
program for the Abadi project and completion of the geological due diligence exercise
on the NTC acquisition.
UPDATE ON NTC ACQUISITION
As announced on 21 June 2007, the Company is proposing to acquire a 60% equity
interest in NTC from Bungo Raya Nusantara (“BRN”), which owns a 3rd
generation
Coal Contract of Work (“CCOW”) concession carrying the right to mine an area of
2,832 hectares for a period of 30 years commencing on 27 March 2006 in Muara
Bungo Regency, Jambi Province, Indonesia.
CES has appointed John T Boyd to undertake a JORC compliant review and mine
planning as part of its due diligence exercise for the proposed acquisition.
Among others, the findings of John T Boyd on the resource and reserves of the project
under JORC calculations are as follows:
a) The total resource is 36.950 million metric tonnes, with 31.7 million classified
as measured resource and 5.968 million classified as indicated resource; and
b) The total recoverable coal reserve is 24.038 million metric tonnes.
The SSA expired on 21 December 2007 and CES is currently in negotiation with
BRN on the extension of the SSA.
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PROJECT REVIEW
PANCARAN ABADI PROJECT
The Pancaran Abadi (“Abadi”) Project is located in the district of Muara Badak and
Anggana, Sub Province Kutai Kartanegara, in the Province of East Kalimantan. The
area of the concession is 1,017 ha. It takes about one hour to reach the concession area
from the town of Samarinda by vehicle.
The geology of the survey area is primarily covered by 2 coal formations, the
Balikpapan Formation and Pulau Balang Formation. The seam found within the
Balikpapan Formation is mainly on the western part of the survey area with a reported
seam thickness of approximately 1.8 metres. The seam is striking south westerly and
dips between 52º to vertical. Thirty percent of the survey area is underlain by the
Kampung Baru Formation which is found irregularly above the Balikpapan
Formation.
The Kampung Baru coal formation is less well developed, central to and west of the
investigation area, and has a strike of almost north to south with a steep dip.
In general, the coal outcrop found has two directional down dips, that is, towards the
north west and south east. This is interpreted from the position of the investigation
area; it is a synclinal fold within the Balikpapan Formation. From the data collected it
is possible that the thickness of the coal seam will increase and boring activities
should be undertaken in the survey area.
The results from the general survey conducted based on outcrops and test pits show
that there are 10 seams of coal.
Activities during the December Quarter
CES has commenced its exploration the Abadi project.
Ravensgate has proposed drilling program covers a prospective area of 300 Hectares
(Ha) located at the south western section of the concession, with 21 drilling locations
to the depth of 75 to 100 metres. The selected 300 Ha is on the Balikpapan formation.
The map of the proposed drill hole locations is as follows:
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Drilling commenced in November 2007 and the program consists of drilling 21
drillholes (figure 1). These drillholes are on two lines approximately paralleling the
strike of the coal seams at a drillhole spacing of about 200m and line spacing of 400-
800 metres. The Company has obtained results for the first six drillholes and detailed
geological mapping is currently underway. Coal quality data on the coal seams drilled
to date are awaited.
Of the eight coal seams identified in the program, four (named seam A,B,C,D in
ascending order) occur in the southwestern corner of the concession in a sub-area
labelled “Block 300”, of area 300ha. Block 300 was identified as the main target area
for future exploration and drilling, because the coal seams are thicker here and the
land use situation more favourable. Seam orientation suggests the presence of a
broad, NE-plunging, anticline.
Table 1 summarises the results from the initial drilling. Of particular importance is
the recording of much greater than expected thicknesses of coal in the C and D seams
in the first three holes drilled on Line 1, respectively 6.35 - 7.71 m and 4.39 - 4.50m.
Exploration potential is greatly enhanced by these initial results. Confidence in seam
correlation on Line 1, with boreholes spaced about 200m apart, is high. The first
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three holes on Line 2 have returned mixed results which do not allow ready
correlation of seams between drillholes, nor between drillholes and outcrop.
However, two (of three) seams intersected in drillhole BH-12 are reasonably thick, at
1.91m and 2.00m.
Table 1: Drilling Summary, Abadi Coal KP Block 300
Drillhole No. Total
Depth
(m)
Coal
Intersections
(m)
Seam
Thickness (m)
Seam
Designation
(as Mapped)
BH-01 92.5 3.50-7.90 4.4 D
29.70-36.86 7.17 C
51.94-53.45 1.51 B?
79.0-80.59 1.59 A?
BH-02 75.0 2.88-7.27 4.39 D
30.95-37.83 6.88 C
53.98-55.53 1.55 B?
BH-03 97.5 9.6-14.1 4.50 D
39.85-46.20 6.35 C
64.50-65.90 1.40 B?
90.33-91.83 1.50 A?
BH-11 29.50 21.31-22.82 1.51 ?
BH-12 76.0 33.51-34.78 1.27 ?
49.59-51.50 1.91 ?
65.65-67.65 2.00 ?
BH-13 35.5 - - -
The very encouraging thickness of the C and D seams justifies further drilling. If
similar results are obtained from drillholes yet to be drilled, continuity of the thick C
and D seams along strike will be confirmed to a high level of confidence. Erratic
results on Line 2 to date indicate that much closer drillhole spacing might be required
to demonstrate continuity of the thin, lower seams.
From these initial results, exploration potential is greatly enhanced. The drilling
program is still in progress and results should be available in February.
KILISUCI PARAMITA PROJECT
The Kilisuci Paramita project has an exploitation licence over 663 hectares of mining
land and an exploration licence over 1,337 hectares adjoining the land. Preliminary
surveying indicates that the coals in the Bengkulu area of South Sumatra will have an
average calorific value of 5,325 Kcal/kg. The Kilisuci Project is geographically
favourable and is located near existing road, rail and port infrastructure. The
Company's targeted objective is to prove up an open cut mineable deposit at a waste
to coal strip ratio of 5:1 or better.
The Regency of Bengkulu has on 24 October 2007 requested CES to prepare a
Feasibility Study on the proposed mine site addressing in particular the environmental
impact and new social issues of the surrounding areas.
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Part of the current access 5.7 km road leading up to the mine has attracted new
villagers whom have built houses alongside the access road. The start of the access
road joins a new road built by the local government and has in fact became the main
road used by some 450 people living in the area.
Activities during the December Quarter
A meeting was held with the Regency of Bengkulu on the 12 November 2007, and he
has agreed to give a work permit to work on the concession provided the social and
environmental impact is addressed.
PROJECT REVIEW
PALAPA PROJECT
The Palapa Coal project is located upon the western margin of the island of Sulawesi.
The regional geology is strongly reminiscent of Kalimantan with moderate coal
production coming from the south western corner of the island.
The project is located within the administrative boundary of the Banti Village,
Kecamatan Baraka, Kabupaten Enrekang, South Sulawesi Province and can be reach
by two wheel or four wheel drive. Ujungpandang city is approximately 300
kilometres from the project area.
Within the project area there are two coal seams considered of economic importance.
The No. 1 seam is very thin, and is very variable. It is described as being between 10-
15 cm with intercalated siltstone and shales. The second seam is also variable and has
been recorded as having a thickness of up to 1.2 metres, but appears to have no
parting.
A geological team has conducted a preliminary survey and has identified “resources”
that comply with the Indonesian Standard for reporting coal resources.
Activities during the December Quarter
No work was carried out at the 100 Ha Palapa Project during the period. This is due to
outstanding obligations under the license that are to be fulfilled by the owners of CV
Palapa. The proposed mapping and geological study is pending the fulfillment of the
obligations by the owners of the tenement to the Mining and Energy office of the
regional government of Enrekang regency.
The 100 Ha project has been issued an exploitation license and as such the owners
would like to see the advancement of that area.
Coal FE is in negotiation with the vendors to allow Coal FE to explore another
concession that has been granted to the owners whilst the owners settle its outstanding
obligations stated under the license.
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EVENT SUBSEQUENT TO THE DECEMBER QUARTER
The Board has resolved not to continue with exploration activities on the Kilisuci
project.
The social and environmental report has been completed and summarises that the
recent settlement on areas surrounding the main access road to the concession area
means that an alternative access road needs to be built.
The cost of this exercise has had a material effect on the projected returns from the
project and after careful consideration and review the Board does not consider it to be
in the best interest of shareholders to proceed.
In return, the Company (through its subsidiary, PT Techventure Indocoal) has on 31
January 2008 entered into a Cooperation Agreement on a joint venture (JV) basis, for
a 70% interest in four (4) Indonesian companies, which currently hold exploration
licenses for iron ore concessions in Central and West Sumatra, Indonesia, following
which, the Company has released its entire shareholding of Lambang Bitara Sdn Bhd
(which holds the rights to the Kilisuci Project) to its previous owners.
Details of the iron ore concessions are as follows:
Project Location JV Partner / Manager
Area Hec
Target Type / Comments
Andalas Mangani Perkasa
Kecamatan Rao PT Andalas Mangani Perkasa
5,116 Bedded Iron Deposit
Andalas Platina Orienta
Kecamatan Lubok Sikaping
PT Andalas Platina Orienta
2,491 Bedded Iron Deposit
Andalas Basindo Natura
Kecamatan Rao, Rao Selatan and Padang Gelugur
PT Andalas Basindo Natura
3,317 Bedded Iron Deposit
Andalas Alam Nasindo
Kecamatan Lubok Sikaping
PT Andalas Alam Nasindo
1,634 Bedded Iron Deposit
TOTAL 12,558
The concession areas can be reached by daily flight from Jakarta to Padang (1 hour
and 30 minutes). From Padang the journey continues by car (four hours drive) through
the well-paved Trans-Sumatera highway to a village called Air Manggis (about 10
minutes by car from Lubuk Sikaping, capital city of Pasaman regency). From Air
Manggis Village another one hour walk to Sariak Laweh Hill with moderate to steep
slope.
The general survey done on these concessions shows iron ore presence is indicated by
magnetite content of rock boulders along slope hill, foot hill and creeks. Boulders
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comprise of volcanic, sedimentary metasediment and lateritic soil in some places. The
primary iron ore were buried or covered by local subsidence. Assays indicated FE
values of economic interest.
The general survey involved the evaluation of the concessions for bedded iron deposit
(BID). The Company is planning further geological mapping, rock sampling and
trenching as well as an aeromagnetic and radiometric survey over the tenements,
purchasing satellite imagery, and rock chip sampling. These exploration activities will
commence beginning March 2008.
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Appendix 5B
Mining exploration entity quarterly report
+ See chapter 19 for defined terms. 30/9/2001 Appendix 5B Page 1
Rule 5.3
Appendix 5B
Mining exploration entity quarterly report Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001.
Name of entity
COAL FE RESOURCES LIMITED
ABN Quarter ended (“current quarter”)
121 969 819 31st December 2007
Consolidated statement of cash flows
Cash flows related to operating activities
Current quarter $A’000
Year to date(6.months) $A’000
1.1 Receipts from product sales and related debtors
- -
1.2 Payments for (a) exploration and evaluation (b) development (c) production (d) administration
(168) - -
(443)
(193) - -
(826) 1.3 Dividends received - - 1.4 Interest and other items of a similar nature
received
17
50 1.5 Interest and other costs of finance paid - - 1.6 Income taxes paid - - 1.7 Other (provide details if material) - -
Net Operating Cash Flows
(594)
(969)
Cash flows related to investing activities
1.8 Payment for purchases of: (a)prospects (b)equity investments (c) other fixed assets
- - -
- -
(3) 1.9 Proceeds from sale of: (a)prospects
(b)equity investments (c)other fixed assets
- - -
- - -
1.10 Loans to other entities - - 1.11 Loans repaid by other entities - - 1.12 Other –advances to BRN
(372) (1,056)
Net investing cash flows
(372)
(1,059)
1.13 Total operating and investing cash flows (carried forward)
(966)
(2,028)
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Appendix 5B
Mining exploration entity quarterly report
+ See chapter 19 for defined terms. Appendix 5B Page 2 30/9/2001
1.13 Total operating and investing cash flows
(brought forward)
(966)
(2,028)
Cash flows related to financing activities
1.14 Proceeds from issues of shares, options, etc. - - 1.15 Proceeds from sale of forfeited shares - - 1.16 Proceeds from share option reserve 87 359 1.17 Repayment of borrowings - - 1.18 Dividends paid - - 1.19 Other - -
Net financing cash flows
87
359
Net increase (decrease) in cash held
(879)
(1,669)
1.20 Cash at beginning of quarter/year to date 2,061 2,851 1.21 Exchange rate adjustments to item 1.20 - -
1.22 Cash at end of quarter 1,182 1,182
Payments to directors of the entity and associates of the directors
Payments to related entities of the entity and associates of the related entities Current quarter
$A'000
1.23
Aggregate amount of payments to the parties included in item 1.2
80
1.24
Aggregate amount of loans to the parties included in item 1.10
-
1.25
Explanation necessary for an understanding of the transactions
Includes fees for all directors during the quarter
Non-cash financing and investing activities
2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows
NIL
2.2 Details of outlays made by other entities to establish or increase their share in projects in which the
reporting entity has an interest
NIL
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Appendix 5B
Mining exploration entity quarterly report
+ See chapter 19 for defined terms. 30/9/2001 Appendix 5B Page 3
Financing facilities available Add notes as necessary for an understanding of the position.
Amount available $A’000
Amount used $A’000
3.1 Loan facilities
- -
3.2 Credit standby arrangements
- -
Estimated cash outflows for next quarter $A’000
4.1 Exploration and evaluation
300
4.2 Development
-
Total
300
Reconciliation of cash
Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.
Current quarter $A’000
Previous quarter $A’000
5.1 Cash on hand and at bank 1,182 2,061
5.2 Deposits at call - -
5.3 Bank overdraft - -
5.4 Other (provide details) - -
Total: cash at end of quarter (item 1.22)
1,182 2,061
Changes in interests in mining tenements Tenement
reference Nature of interest (note (2))
Interest at beginning of quarter
Interest at end of quarter
6.1 Interests in mining tenements relinquished, reduced or lapsed
NIL
6.2 Interests in mining tenements acquired or increased
NIL
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Appendix 5B
Mining exploration entity quarterly report
+ See chapter 19 for defined terms. Appendix 5B Page 4 30/9/2001
Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rights together with prices and dates.
Total number Number quoted Issue price per security (see note 3) (cents)
Amount paid up per security (see note 3) (cents)
7.1 Preference +securities (description)
7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs, redemptions
7.3 +Ordinary
securities
71,734,253 23,824,253
7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs
7.5 +Convertible
debt securities
(description)
7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted
7.7 Options (description and
conversion
factor)
8,500,000 35,867,126
Nil 35,867,126
Exercise price
20 cents
20 cents
Expiry date
31/12/2009
31/12/2009
7.8 Issued during quarter
8,784,550 8,784,550 20 cents 31/12/2009
7.9 Exercised during quarter
7.10 Expired during quarter
7.11 Debentures (totals only)
7.12 Unsecured
notes (totals
only)
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Appendix 5B
Mining exploration entity quarterly report
+ See chapter 19 for defined terms. 30/9/2001 Appendix 5B Page 5
Compliance statement 1 This statement has been prepared under accounting policies which comply with
accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).
2 This statement does give a true and fair view of the matters disclosed.
Sign here: ............................................................ Date: ............................
(Company Secretary) Print name: Ian Macpherson
Notes 1 The quarterly report provides a basis for informing the market how the entity’s
activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.
2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in
mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.
3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities.
4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive
Industries and AASB 1026: Statement of Cash Flows apply to this report.
5 Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.
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