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23 April 2009

Caledon Resources plc

Quarterly Report for period ending 31 March 2009

 

COOK MINE - PRODUCTION

	Quarter			Year to Date
	March  2009	March  2008	Change	March  2009	March  2008	Change
	'000 T's	'000 T's	%	'000 T's	'000 T's	%
Raw coal production	175	95	+84%	175	95	+84%
Coking coal produced	118	66	+79%	118	66	+79%
Thermal coal produced	22	12	+83%	22	12	+83%
Coking coal sold	118	90	+31%	118	90	+31%
Thermal coal sold	7	15	-53%	7	15	-53%

 

Cook Mine Operations

Production for the March quarter was considerably higher than the comparison period reflecting the fact that the Magatar system was being commissioned during 2008. The unit is now fully operational. 

Sales volumes were slightly above the targeted annual 400kt level however the majority was at spot pricing. Prices for the new contract year commencing 1 April 2009 are yet to be finalised but are expected to broadly reflect the fall reported for the BHP hard coking coal settlement with Japanese steel mills.

The previously announced manning reduction to 145 was completed during the quarter under review. 

Minyango

In October 2008 the Company commissioned SMG Consultants Pty Ltd (SMG) to undertake a concept level study on the development of an underground coal mine on Minyango EPC699. Due to the level of detail in the final report, SMG concluded that it had progressed beyond the concept stage and was close to pre-feasibility level.

The study was presented to the Company in April 2009 and confirmed that Minyango is sufficiently attractive to move to the next stage of evaluation. A number of production scenarios were considered with the most efficient incorporating 2 mini-walls (a short form version of a longwall). Development driveage to support the mini-walls' rapid advance would be achieved utilising the continuous miner/continuous haulage technology currently in operation at the Cook mine.

The study identified the need for an infill drilling program to give greater coal quality, resource definition and gas content knowledge. A drilling program to achieve these targets will be finalized in the current quarter, with actual drilling starting shortly thereafter. Based on coal quality results to date, Minyango is expected to have an overall yield of 84% of which 62% is coking coal and 38% is thermal coal.

In its report SMG identified the south-eastern corner of EPC699 as the preferred location for the proposed mine access portal and surface infrastructure. This area is included in the 2004 hectare cattle property known as Tantallon which was bought by Caledon in February 2009 for A$3.3m. Owning this property will be a significant advantage in any mine approval process and ongoing access regime. As most of the land will not be required (or impacted) it is intended to lease the property for continued cattle grazing.

Expenditure of A$262,000 (excluding the purchase of Tantallon) was incurred on Minyango during the quarter.

Resource Review

A review of both the Cook and Minyango geological models is nearing completion and revised resource statements (as defined in accordance with the JORC Code) are expected to be available for both properties by the end of April.

Corporate Activity

As previously advised, Caledon has engaged RBC Capital Markets to conduct a strategic review including soliciting further interest in the Company and its assets (the 'Process'). This Process is ongoing and there is no certainty as to the timing, terms or structure of any transaction, nor that a transaction will result from the Process. Shareholders are advised to take no action at this time. Any further announcement will be made as soon as appropriate. 

For further information, please contact:

United Kingdom

 

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