LINC ENERGY LTD // 2009 ANNUAL REPORT

04 REVIEW OF
OPERATIONS AND
ACTIVITIES CONTINUED
Environmental management
Continued
In February, the Queensland Government released a UCG
policy that established an expert scientific panel to assess
the social, economic and environmental impacts associated
with UCG. The panel will consider ‘pilot project reports’
submitted by various UCG companies operating within
Queensland. The panel will then report its findings to the
Queensland Government.
Linc Energy has progressed its Environmental Impact
Statement (EIS) for the proposed Chinchilla commercial
facility and is able to rely on information collected as part
of that process to contribute strongly to the expert UCG
policy panel. Linc Energy will continue to progress impact
modelling at both pilot and commercial scale sites to
contribute to the assessment activities of the panel.
In 2008, an extensive system of groundwater piezometers
was installed to enable further assessment of Chinchilla
groundwater conditions. This investment provides further
data to allow for the modelling of groundwater impacts and
confirms that, when appropriately designed and managed,
UCG can be undertaken without deleterious impacts on
the groundwater environment. This adds to the already
extensive data set of groundwater parameters gathered
over 10 years at the Chinchilla Demonstration Facility,
confirming the environmental credentials of Linc Energy’s
operations and technologies.
During the year, Linc Energy was free of serious
environmental incidents and was not subjected to any
enforcement action by regulators in any state or territory
of Australia.
Exploration
Linc Energy’s business requires an active exploration
program to identify suitable resources for UCG. Coal that
is suitable for UCG is deep underground and is generally
unsuitable for extraction by traditional methods. With a
diverse and extensive portfolio of coal deposits, Linc Energy
aims to ensure it has sufficient coal resources to sustain
UCG operations well into the future.
Arckaringa Basin
Extensive review of the South Australian Arckaringa Basin
tenements took place following the SAPEX Limited merger.
The review was conducted to identify suitable locations
for initial appraisal drilling within the seven vast Petroleum
Exploration Licences (PELs). Following confirmation of
nine drilling locations, Linc Energy has now conducted all
necessary notifications and clearances and has submitted
final paperwork with Primary Industries and Resources
South Australia (PIRSA), in anticipation for the start of
drilling. The nine exploration wells will seek to evaluate
the UCG potential of Linc Energy’s Arckaringa tenements
through extensive testing and gathering of relevant
geological data, including geophysical, geotechnical
and hydrogeological information.
Biloela
The drilling of a preliminary four hole program was
completed in March 2009 within Exploration Permit for
Coal (EPC) 908, near Biloela, central Queensland. The
basin is considered prospective for tertiary aged low rank
coals, potentially suitable for UCG. Drilling was centred in
the vicinity of historical Geological Survey of Queensland
Stratigraphic hole, Monto 5. Whilst drilling encountered
several coal intersections at depths below 150 metres, they
were found to be of insufficient thickness and continuity to
be considered suitable for the UCG process. A basin wide
review is currently being conducted to appraise all Linc
Energy tenements within the area (EPCs 908, 909, 1248
and 1323) for other potentially suitable drilling locations.
Chinchilla
Linc Energy’s Chinchilla project area consists of Mineral
Development Licence (MDL) 309, EPC 635 and EPC 897.
Linc Energy submitted a Mining Lease application for this
area. From June to December 2008, a significant drilling
program was undertaken and consisted of 26 chip holes
and 30 core holes. This work brought the total exploration
at the site to in excess of 250 holes. The drilling allowed
for a large upgrade in the quantified coal resource (in
accordance with the JORC Code1 ) for the project area.
In January 2009, this totalled 775 million tonnes, consisting
of 24 million tonnes Measured, 383 million tonnes Indicated
and 368 million tonnes Inferred1 .
Dalby
Drilling in Linc Energy’s Dalby tenements (MDL 371a)
concluded in December 2008. Following collation of
drilling results, Xenith Consulting analysed the data and
identified a total Inferred coal resource in accordance with
the JORC Code of 146 million tonnes1 . This report was
lodged with the Department of Employment, Economic
Development and Innovation (previously the Department of
Mines and Energy) in June 2009 as part of the supporting
documentation for Linc Energy’s MDL application 371a. On
5 June 2009, Linc Energy also lodged an EPC application
(EPC 1770) within MDL 371a. This application was an
effective replacement for previous Linc Energy EPC 704.
Emerald
In June 2008, Linc Energy undertook an extensive
exploration drilling program in EPC 980, 1226 and
1267, referred to as the ‘Theresa Project’, with the aim of
delineating an Inferred resource in accordance with the
JORC Code. To date, Linc Energy’s total exploration for the
‘Theresa Project’ has consisted of 47 chip holes and 34
core holes for a total of 21,097 metres drilled.
On 18 November 2008, Linc Energy announced a total coal
resource of 852 million tonnes Inferred (in accordance with
the JORC Code 2 ) for the Theresa area. On 24 November
2008, Linc Energy made an application for a Mining Lease
(MLa 70405) over 104 square kilometres of the area covering
the ‘Theresa’ prospect, which is much of EPC 980 and part
of EPC 1226. A preliminary Initial Development Plan was
completed in support of the Mining Lease application.
On 24 June 2009, Linc Energy appointed the UBS
Investment Bank to commence the strategic sales process
for this non-core asset.
Galilee
In May 2009, Linc Energy began an initial 24 core hole
drilling program in the Galilee Basin in the area covered
by MDL application 372. Based on historical drilling
information and initial Linc Energy drilling results, a coal
mineralisation exploration target3 of 5.0 to 5.5 billion
tonnes1 in accordance with the JORC Code has been
identified, including 1.6 to 1.9 billion tonnes identified with
potential for extraction via open cut mining methods within
a depth limit of 120 metres.
The initial program continues to progress well and subject
to continued positive results, it is Linc Energy’s intention
to expand its Galilee program, where it will seek to further
delineate the full potential of the open cut deposit. By
increasing the amount of drilling Linc Energy will seek to
upgrade to Indicated status the entire area defined to have
open cut potential, in accordance with the JORC Code. This
will require a more substantial program with a revised total of
over 100 holes. Linc Energy believes the program will confirm
the viability of a long life, low cost, high quality thermal coal
open cut mining project, of world-class proportions.
On 24 June 2009, Linc Energy appointed the UBS
Investment Bank to commence the strategic sales process
for this non-core asset.
1 The information in this report relating to exploration results and coal resources is based on information compiled by Troy Turner, who is a member of the Australian Institute of Mining and
Metallurgy and who is employed by Xenith Consulting Pty Ltd. Troy Turner has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration
and to the activity which they are undertaking to qualify as a competent person as defined in the 2004 Edition of the “Australasian Code for Reporting Exploration Results, Mineral
Resources and Ore Reserves”. Troy Turner consents to the inclusion in this report of the matters based on their information in the form and context in which it appears.
2 The information in this report relating to exploration results and coal resources is based on information compiled by Tim Jones, who is a member of the Australian Institute of Mining
and Metallurgy and who is employed by Northern Geoscience Pty Ltd. Tim Jones has sufficient experience which is relevant to the style of mineralisation and type of deposit under
consideration and to the activity which they are undertaking to qualify as a competent person as defined in the 2004 Edition of the “Australasian Code for Reporting Exploration Results,
Mineral Resources and Ore Reserves”. Tim Jones consents to the inclusion in this report of the matters based on their information in the form and context in which it appears.
3 In accordance with the requirements of clause 18 of the JORC Code regarding exploration, the following compulsory statement concerning exploration targets is included: “The
potential quantity and quality is conceptual in nature, there has been insufficient exploration to define a Mineral Resource and it is uncertain if further exploration will result in the
determination of a Mineral Resource.”
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