Rey Resources holds mineral exploration leases covering large areas in the Canning Basin in Western Australia.  Rey Resources has 38 granted exploration leases and applications covering approximately 8,000 square kilometres in the Canning Basin, predominately in the Fitzroy Trough.  The project area is approximately 150 kilometres to the south-east of the port of Derby. This is a semi arid region which borders the Great Sandy Desert to the south.

The project is estimated by the management of Rey Resources to contain in excess of 1 billion tonnes of coal at depths from the surface to 500m.  Rey Resources strategy is to develop a thermal quality coal resource to support an initial, export mining operation as a precursor to a larger scale operation in this extensive coalfield. This maiden resource was reported in April 2009 and prefeasibility studies commenced.

The Port of Derby, approximately 150 kilometres by sealed highway to the north west of the coal leases offers the potential to export coal form its existing wharf. However, due to large tidal ranges and shallow draught, capacity will be limited. To enable larger tonnages to be mined and exported, a deepwater site is required. The closest to the project is at Point Torment, approximately 175 kilometres to the north.

The concept is to develop an export thermal coal operation that sells coal to power generation customers in south Asia.

 
History

Compared to the Bowen Basin in Queensland, and Sydney Basin in NSW, the Canning Basin has been the subject of only minor coal exploration. The main exploration activity in the region has been for petroleum and metals.  Possibly the first recorded mention of coal in the Canning Basin was an occurrence of hydrous bituminous coal reported at a depth of 50 feet in a water well at Liveringa Station in 1915. The seam was recorded as 5.5 metres thick.

During the 1960s through the early 1980s, the region was subject to several exploration surveys by companies seeking coal with coking characteristics. None was found- the coal in the basin is suitable for thermal markets and does not display coking properties. The depressed price of thermal coal during this period, and the relatively remote location, led to the withdrawal of the exploration companies despite reporting of several coal "reserves".
Rey Resources acquired its initial coal leases in 2005 and has continued to build its position in the basin. A Heritage and Cultural Agreement was signed in 2007 and drilling commenced at Paradise/ duchess in May 2008.

Geology

Significant coal occurrences occur in the Cretaceous, Jurassic, Triassic and Permian sediments of the Canning Basin.  Almost all previous significant coal intersections were in the western half of the basin and occurred in virtually all of the major structural elements including the Lennard Shelf, Fitzroy Trough, Jurgerra Terrace, Broome Arch, Willara Sub-Basin, Kidson Sub-Basin and the Ankatell Shelf.

Rey Resources is focusing on the Permian Lightjack Formation in the Fitzroy Trough where the thickest coal intersections were recorded by the historical exploration programs.  The Lightjack Formation is shown in the map above. It is located in a series of gentle east-west trending anticlines and synclines that are the major structural features controlling the coal's disposition. Although the Lightjack Formation outcrops for an estimated 250-300 kilometres throughout the Company's leases, the coal seams are not seen on the surface due to a weathering profile of five to in excess of 20 meters.

Work done in the 1960s and 1970s, and confirmed by the Company in 2008, indicates a thermal coal which should produce washed specifications of approximately:

• energy content of approximately 5,500- 6,000kcal/kg
• 10-15% ash
• air dried moisture levels at approximately 9%
• sulphur levels in washed coal at  0.9-1.3%