Aquila Upgrades Eagle Downs Coking Coal Reserves 61% To 254 Million Tons

Reserves of hard coking coal at diversified mining explorer and developer Aquila Resources Ltd.'s (AQA.AU) Eagle Downs project are 61% above previous estimates, totaling 254 million tons of unprocessed coal, the company said Monday.

Aquila said the reserves would support a 47-year mine life at the site, although the mine presently has no way of getting its product to export markets due to a dispute between Aquila and Vale S.A. (VALE), which owns a 50% stake in the mine.

Aquila said it expected to be granted a mining lease by July but a definitive feasibility study on the project--an important step towards production--couldn't be completed until it had export capacity.

Around 206.6 million tons of Eagle Downs' coal reserves were in the most-reliable "proved" category, with another 47.5 million tons regarded as "probable," a less-accurate measure, Aquila said.

In terms of resources--a measure of overall coal in the ground as opposed to economically recoverable reserves--the company said Eagle Downs has 959 million tons, with 819 million tons in the most-reliable "measured" and "indicated" categories.

Eagle Downs is in the Bowen Basin region of Queensland, the world's biggest exporter of the hard coking coal used in steelmaking. It sits just south of the four million tons a year Isaac Plains mine, also a 50-50 joint venture of Aquila and Vale.

Last February, Aquila announced a dispute with Vale, saying that the Brazilian miner hadn't committed to a plan to export Eagle Downs' coal through a new rail link to the port of Abbot Point in northern Queensland, which currently is used exclusively by Xstrata PLC (XTA.LN).

Aquila said that without this capacity it wouldn't be able to complete its definitive feasibility study. It had also applied for capacity at Dalrymple Bay, the world's biggest coking coal terminal, and Wiggins Island, a multi-user coal export terminal being developed close to the port of Gladstone in central Queensland, the company said.

 
   -By David Fickling, Dow Jones Newswires; [phone]; [e-mail]