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LINC ENERGY LTD

Linc Energy increases Galilee coal tonnage to 7.8 billion tonnes

Linc Energy (ASX: LNC) is encouraged by the company's latest drilling program at its Galilee tenement in Queensland, announcing an initial resource statement of 7.8 billion tonnes of coal.

The JORC report is based on 47 exploration core holes, representing part of a total of 63 holes drilled to date from a 126 hole program, which has been completed within the Linc Energy's Galilee Mineral area MDLa 372.

Linc Energy chief executive Peter Bond said the company was very excited by the results of the mid-phase of our drilling program.

"This deposit continues to amaze us as we explore it further," Mr Bond said.

"The increasing size of the deposit and the increased potential of the open cut area are all fantastic outcomes.

"The possibility that you can plan and operate an open-cut mine at 30 million tonnes per annum for 30 years, at such a potentially low mine cost base and with such a degree of confidence of production rates is a rare thing in the coal industry."

The exploration program in MDLa 372 commenced in early June and over 15,000 metres of chipped or cored drilling has been completed to date. The MDLa area represents in excess of 261 square kilometres and as this large resource area is further defined, the results continue to exceed previous expectations, including those released by the company on 24 August, indicating a target of 5.0 to 5.5 billion tonnes.

Drilling confirms that the Permian age coal seams in the MDLa area attain cumulative coal thicknesses in excess of 35 metres with an implied strip ratios averaging around 3:1 in the area targeted for open cut mine development, suggesting a very cost effective open cut/strip mine would operate in that area.

ln the period since the completion of resource modelling by Xenith Consulting, further drilling has occurred in the sub-crop area adjacent to the target open cut mine area. This confirmed that the Tertiary cover (the overburden) is thinning to the east, even more than had been indicated by previous modelling and means an improved strip ratio in these areas may be expected once further drilling has been completed.

Overburden thicknesses of less than 30 metres have been encountered in some areas and Linc Energy is confident that a very attractive open cut coal mineralisation target of in excess of a billion tonnes will be measured, in the near future.

Further coal quality and washability studies have confirmed export thermal coal yields in the range between 75 to 90%. Analysis of individual 2m thick plies in areas of the resource show unwashed MDLa 372 ash levels between only I and 12o/o raising the possibility of initial mine development and production without coal washing.

Mr Bond said Linc would continue drilling and better define this resource at a pace.

"These results reflect what an increasingly valuable asset Linc Energy has within this Galilee coal area," he said.

"I am increasingly convinced that this acreage represents the best area of the Galilee basin, and can host a very large, long life, low cost mining operation producing high quality thermal coal for export for a generation ahead."

The Galilee Coal project tenement MDLa 372, is located in the Galilee Basin approximately 160 km North West of the township of Clermont in Central Queensland.