atrum coal - quarterly activities report for the period...

ASX:ATU ASX:ATU ASX:ATU ASX:ATU ---- Share InformationShare InformationShare InformationShare Information Issued Shares: 134.7m Registered OfficeRegistered OfficeRegistered OfficeRegistered Office Ground Floor, 510 Hay Street, Subiaco WA 6008 TTTT +61 8 9388 3131 EEEE [email protected] www.atrumcoal.comwww.atrumcoal.comwww.atrumcoal.comwww.atrumcoal.com

Board of DirectorsBoard of DirectorsBoard of DirectorsBoard of Directors Chairman Executive Director Executive Director Managing Director Company Secretary

J. Chisholm R. Moran G. D’Anna E. Lilford G. D’Anna

Key ProjectsKey ProjectsKey ProjectsKey Projects Groundhog Peace River Naskeena Bowron River

Ownership: 100% Ownership: 100% Ownership: 100% Ownership: 100%

31 January 2014 ASX Release

QUARTERLY ACTIVITIES REPORT FOR THE PERIOD ENDING 31 DECEMBER 2013

HIGHLIGHTS Groundhog Anthracite Project: 2013 Drilling Program and Field Season

� Pre-Feasibility Study (PFS)/ Reserve Definition drilling program completed at Groundhog with a

total of 64 diamond core drill holes with excellent core recovery designed to target early reserve definition and advanced coal quality testing

� Large diameter core drilling completed enabling the Company to undertake product specific

washability analysis proximate to a Run-of-Mine scenario which will demonstrate product suite identification

� Coal and ply samples submitted to ALS and Loring Laboratories for coal quality testing

including ash mineralogy, proximate and ultimate analysis

� Environmental and baseline monitoring studies including hydrogeology, hydrology, geochemical and geotechnical studies continue

� Gas and reservoir testing completed for mine planning and future assessment for development

of bulk sample and small scale mine

� Climatology, mountain ungulate and groundwater hydrology testing and monitoring continues to feed into the environmental baseline for mine planning and permitting

� Advanced geological modelling from the 2013 drill program completed, with the results

currently being compiled for an updated resource statement for the PFS � Offtake discussions progressing with Managing Director workshopping coal specifications with

customers in Japan, Korea, China, Russia and India

Atrum Coal NL ACN 153 876 861 – Ground Floor, 510 Hay Street, Subiaco WA 6008 TTTT +61 8 9388 3131 EEEE [email protected] www.atrumcoal.comwww.atrumcoal.comwww.atrumcoal.comwww.atrumcoal.com

� Environmental engineering group Knight Piesold engaged to complete hydrogeological and subsurface water quality testing in preparation for bulk sample planning and permitting

� SRK Consulting engaged to complete geochemical studies

� PFS advancing at Groundhog with an initial focus on the north-west zone with the primary objective

to delineate a reserve – expected completion end-Q1 2014

Identification of Bulk Sample locations hosting ultra-high grade anthracite � Completed seam correlation, structural modelling and coal quality interpretation from the 64

diamond core drill hole program completed in 2013 � Recent coal quality results are excellent and in line with 2012 results with wash yields ranging from

57% to 83% for a range of potential anthracite products � Two areas have been identified as shallow entry points into the high quality #70 seam for maiden

production of a 100,000 tonne bulk sample in 2014, with these areas confirmed to host ultra-high grade anthracite

� Atrum in advanced discussions with a number of key consumers of high grade anthracite and ultra-

low volatile PCI coal for potential bulk samples during 2014 Appointment of Consultants for Stage 1 Mine Development at Groundhog � Appointment of key consultants to progress the PFS and Stage 1 Mine Development at Groundhog:

� Valzan - mine planning, mine design and engineering for Stage 1 Mine Development � DMT Geosciences - bulk sample mine design and engineering for the bulk sample � Norwest Corporation – Coal Handling Preparation Plant and process engineering design.

� Atrum is on track to execute on its plans for a bulk sample Q4 2014 – application expected to be

lodged with the British Columbia Ministry of Energy and Mines in Q1 2014 Port Capacity Secured at Stewart � Terminal Services Agreement and Land Reservation Agreement signed with Stewart Bulk

Terminals for the export of 1.5Mtpa on non ‘take or pay’ terms commencing 2014 � Memorandum of Understanding signed with Stewart World Port for the export of up to a further

5Mtpa with staged export commencing 2016 � Initial trucking strategy to the deep sea Port of Stewart only 150km away is fundamental to the

Company’s strategy of minimising capital entry to production


Extended Mines Act Permit Granted � Atrum granted Mines Act permit for a further five-year term at Groundhog � Key permitting milestone allows Atrum to progress exploration work on 15 Groundhog licences

including the northern zone where a bulk sample and test shipments program is planned Naskeena Coal Project:Naskeena Coal Project:Naskeena Coal Project:Naskeena Coal Project: Acquisition of contiguous coal licence application at Naskeena Coal Project � Atrum has entered into an agreement to acquire a 100% interest in 1,500 hectares of coal licence

applications in the Naskeena coalfield in British Columbia, Canada � Newly acquired licences strategic to Atrum’s spin-out strategy of the Naskeena, Bowron River and

Peace River coal projects � Atrum now controls 12,900 contiguous hectares representing the entire Naskeena coalfield � A revised Notice of Work (“NoW”) will be submitted to the BC Ministry for Mines and Energy and

includes the newly acquired area in preparation for maiden exploration in 2014 � Spin-out of Naskeena, Bowron River and Peace River coal projects progressing with ATO tax ruling

expected in early 2014 IPO and spinIPO and spinIPO and spinIPO and spin----out of exploration projects:out of exploration projects:out of exploration projects:out of exploration projects: Spin-out of Naskeena, Peace River and Bowron River Coal Projects � Atrum has continued preparations for spin-out and ASX listing (IPO) of its Naskeena, Bowron River

and Peace River exploration assets � Spin-out will assist funding development of the Company’s exciting greenfield metallurgical coal

assets and allow Atrum to focus on the development of Groundhog � Spin-out will have new Board and management � Existing Atrum shareholders, as at the Record Date, will receive a substantial share position in the

new IPO at no cost � Spin-out timing, capital structure, management personnel and Record Date currently being

finalised, with shareholders meeting anticipated late March 2014

� ASX waivers received assisting the Company with distributing shares to existing Atrum shareholders as part of the spin-out


Corporate: Private Placement � Atrum completes ~$18.5 million equity placement (before costs) to Sophisticated and Institutional

Investors with overwhelming demand from existing shareholders and new institutional funds � Atrum to accelerate development at its 1.57Bt Groundhog Anthracite Project in British Columbia

towards first coal production in 2014 UBS Coal and Iron Ore Conference � Managing Director Dr Eric Lilford participated in the UBS Coal and Iron Ore Conference held in

Sydney in November 2013

Atrum Infrastructure and Logistics � Establishment of “Atrum Infrastructure and Logistics” business unit and appointment of Business

Development Manager to drive additional shareholder value through infrastructure opportunities beyond Atrum’s non take or pay transport arrangements

Atrum Coal NL (“AtrumAtrumAtrumAtrum” or the “CompanyCompanyCompanyCompany”) (ASX: ATUASX: ATUASX: ATUASX: ATU) is pleased to report the Company’s activities for the quarter ended 31 December 2013 in relation to its 100%-owned metallurgical coal projects located in British Columbia, Canada. Commenting on the quarterly achievements, Chairman James Chisholm stated: “This is an exciting year for the Company. We have defined a world class mining opportunity in a mining-friendly jurisdiction. We are well funded and look forward to delivering a high value, low capex operation in the near term.”

GROUNDHOG ANTHRACITE PROJECT The Groundhog Anthracite Project (GroundhogGroundhogGroundhogGroundhog) is located in the Groundhog Coalfield in the northern part of the Bowser Basin in north-western British Columbia, approximately 890-km northwest of Vancouver, 150-km northeast of Stewart, and 300-km northeast of Prince Rupert. The Groundhog project comprises 22 granted coal licences covering an area of 13,776 hectares and four coal licence applications covering an area of 9,039 hectares, providing a total land holding of 22,815 hectares. In January 2014, the Company announced the acquisition of an additional 11 coal licence applications from Panstone Mines and Minerals Inc. covering an area of 15,554 hectares, providing for an expanded strategic land holding of 38,369 hectares.


Groundhog Anthracite Project Groundhog Anthracite Project Groundhog Anthracite Project Groundhog Anthracite Project –––– location maplocation maplocation maplocation map

Groundhog is prospective for high ranking anthracite coal, suitable for application to the steel and ferro-alloy industries. The Groundhog project is located in close proximity to key mining infrastructure including rail, port, road, power and water facilities. A rail easement or ‘right-of-way’ completed by the British Columbia Railway (BCRBCRBCRBCR) foundation runs adjacent to the project for approximately 30km southwards. At this point it connects with existing rail, at the Minaret Terminus, and continues on to the dedicated coal terminals at the deep sea ports of Prince Rupert and Port Metro Vancouver.

CN Rail operates under a long-term lease arrangement with BCR, and operates the rail line between Prince George and Port of Prince Rupert and on the Dease Lake Line to Minaret.

569Mt JORC Measured & Indicated

998Mt JORC Inferred

200200200200––––250Mt 250Mt 250Mt 250Mt

TargetTargetTargetTarget

0000----25Mt 25Mt 25Mt 25Mt

TargetTargetTargetTarget


COAL RESOURCES The JORC resources at Groundhog are currently 1.57Bt, as summarised in the table below:

JORC Category Upgraded Resource (Mt)

Measured 16

Indicated 553

Inferred 998

TotalTotalTotalTotal 1,567Mt1,567Mt1,567Mt1,567Mt

Coal resource estimation parameters: � 0.3m seam thickness cut-off � 100m river setback Groundhog is amenable to open cut mining with 415Mt occurring between 0 and 100m depth and 90% of the total 1.57Bt resource occurring between 0 and 300m depth. The table below illustrates the depth cut-off of the JORC resource at Groundhog:

JORC Resource Breakdown By Depth (Mt)

< 50m 154

< 100m 415

< 200m 993

< 300m 1,420

Unrestricted 1,567

COMPLETION OF PFS INFILL DRILL PROGRAM The Company’s infill exploration program commenced at Groundhog on 21 July 2013 and concluded on 17 October 2013. It consisted of a total of 64 diamond core holes, including 21 large-diameter core holes (nine inclined holes and 12 vertical holes) which extracted approximately 300kg of material for advanced run-of-mine wash testing and product simulation. The exploration program was specifically designed to infill drill the north-west zone at Groundhog, so that with further modelling a portion of the existing resource could be used to define an initial mineable Reserve.

JORC Resource at GroundhogJORC Resource at GroundhogJORC Resource at GroundhogJORC Resource at Groundhog

JORC Resource at Groundhog by depthJORC Resource at Groundhog by depthJORC Resource at Groundhog by depthJORC Resource at Groundhog by depth

Drill rig at work at GrouDrill rig at work at GrouDrill rig at work at GrouDrill rig at work at Groundhogndhogndhogndhog


The program targeted upper seams of the coal measures, specifically the high ranking #70 coal seam and definition of its outcrop/sub-crop in the north-west zone. Exploration results from the 2013 drilling program were not included in the recent Scoping Study and are expected to add significant upside to the project metrics in the ongoing Pre-Feasibility Study.

The #70 seam is interpreted to be a shallow and wide coal seam, exhibiting a high yield within the coalfield package as well as excellent coal qualities akin to a premium grade anthracite. The #70 seam is the target seam from which the Company plans to complete a bulk sample to enable further discussions with anthracite consumers. The Company completed the update of the geological model based on the drilling and surface mapping completed during the 2013 field season and is anticipating the delineation of a maiden reserve during Q1 2014 ahead of the completion of a PFS. Advanced geological modelling of recent exploration results has been completed and an updated resource / reserve statement is anticipated to be completed during Q1 2014. The recent exploration results will be collated with results of the 2012 drilling program together with all historical data to form the basis of the PFS at Groundhog. Exploration results from this year’s drilling program were not included in the recent Scoping Study and are expected to add significant upside to the project metrics in the PFS. The map below illustrates the drill hole locations from the 2013 infill drilling program and the concentrated focus in the north-west area:

Core from the 2013 PFS drilling program Core from the 2013 PFS drilling program Core from the 2013 PFS drilling program Core from the 2013 PFS drilling program Large diameter drill coreLarge diameter drill coreLarge diameter drill coreLarge diameter drill core


The Company is working with its environmental consultants with baseline monitoring studies including hydrogeology, hydrology and geotechnical assessments continuing. The Company has also recently installed a weather station that will be used to monitor changes in weather patterns and conditions during the different seasons, with these results being used as part of the mine planning and engineering design programs. ENVIRONMENTAL AND GEOCHEMICAL STUDIES The Company recently completed gas and reservoir testing on five of the drill holes. Both shallow and deep sites were specifically selected to ensure that the results would provide a representative sample for mine planning and development of a bulk sampling program and small scale mine. Gas desorption testing was completed on three locations with the collection of 19 samples, and reservoir tests were configured on two locations. Six of the drill holes have been selected for conversion to groundwater monitoring locations and results will be used for future environmental baseline information for mine planning. The hydrogeological testing is aimed at defining sub-surface water quality and volume and is important in the development of the mine design. The Company has engaged environmental engineering group Knight Piesold Consulting to complete the hydrogeological testing in preparation for the mine plan submission and bulk sample permit. Construction materials and monitoring equipment have been mobilised and installation operations are underway. Knight Piésold Consulting continues hydrogeological testing in preparation for the mine plan submission and bulk sample permit. Knight Piésold has installed vibrating wire piezometers and pressure transducers / data loggers and will be responsible for the collection of the initial set of groundwater samples from the monitoring wells. Groundwater samples from the wells will be taken on a regular basis in order to monitor any seasonal changes.

Drill hole density in northDrill hole density in northDrill hole density in northDrill hole density in north----west zone at Groundhogwest zone at Groundhogwest zone at Groundhogwest zone at Groundhog


In addition, SRK Consulting has been engaged to complete a geochemical characterisation study and formulate a conceptual hydrogeologic model. The geochemical characterisation program will include:

� Static testing on a spatially representative number of waste rock and process residue samples to provide an indication of the variability within these materials;

� Shake flask extraction (leach extraction) testing on 2008 drill core samples to provide an indication

of the potential weathering the materials may undergo; � Mineralogical characterisation (petrographic and Reitveld XRD) to characterise the forms and

distribution of minerals within the waste rock and process residues; � Kinetic tests on the waste rock and process residues; and � Characterisation of process water from wash tests for a full suite of water quality parameters.

The results of the geochemical characterisation program will assist in the mine design and environmental management plan for Groundhog and the proposed bulk sample and small scale mine. Specifically, such tests will be used for determining proper long-term disposal of waste rock and residues and thereby ensure mining occurs in an environmentally-sound manner.

IDENTIFICATION OF BULK SAMPLE LOCATIONS The geological model at Groundhog has been updated to include coal seam correlation and coal quality interpretation of exploration results from the recent 64 diamond drill hole program. Drilling targeted the thicker, near surface, higher quality #70 coal seam in the north-west zone where initial production is anticipated to commence with extraction of a 100,000 tonne bulk sample. Two sites have been identified as attractive bulk sample locations hosting ultra-high grade quality anthracite. The Company is targeting bulk sample works in late 2014 and has engaged independent consultants Knight Piesold, DMT Geosciences, SRK and Rescan to assist in securing the necessary approvals from the BC Ministry of Energy and Mines.


The mine design and associated mine plan for the bulk sample is underway, utilising a simple room and pillar mining method accessed through an adit to provide the Company with a low-capital entry to production. It is likely that the adit will double as the access point for the commencement of small scale mining and future commercial production. The Company continues to advance discussions with potential end-users of the anthracite on the back of recent coal quality data. The map (right) outlines the two identified locations for the bulk sample (red rectangles) together with an overview of the historical drilling completed in the north-west area (green and red dots) of Groundhog, including this year’s exploration program (yellow dots). The preferred location of the bulk sample has been identified on the basis of seam thickness, coal quality, structural geology, shallow floor dip, ease of access and high product yield. COAL QUALITY

The coal quality results received from the 2013 PFS / infill drilling program at Groundhog were excellent and are in line with 2012 results. Wash yields on the coal produced at Groundhog range from 57% to 83% for a range of potential ultra-high grade and high grade anthracite, and ultra-low volatile PCI products. Sub 10% ash anthracite lumps and fines target product mix for the bulk sample is expected to achieve yields of >57% (with further optimisation expected), very low inherent moisture, volatile matter content of less than 5%, fixed carbon in excess of 84% and low sulphur content (~0.6%).

Bulk sample location mapBulk sample location mapBulk sample location mapBulk sample location map


Coal quality results at the two preferred bulk sample locations, based on 2013 data, is shown in the table below and clearly demonstrates ultra-high grade anthracite:

Bulk Sample A

(adb)

Bulk Sample B

(adb)

High-Grade

Anthracite

(adb)

Ultra-High Grade

Anthracite

(adb)

Chinese BF Coke

(adb)

Moisture 1.4% 1.2% 15% (max) 13% (max) 12% (max)

Ash 9.9% 9.7% 15% (max) 12% (max) 12% (max)

Volatiles 4.8% 4.4% 10% (max) 5% (max) 2% (max)

Fixed Carbon 84% 85% 75% (min) 80% (min) 86% (min)

Sulphur 0.6% 0.6% 1% (max) 0.6% (max) 0.6% (max)

Classification Metallurgical

Coal

Metallurgical

Coal

Metallurgical

Coke

A comparison of the potential anthracite specifications (notably carbon) at Groundhog with Chinese BF Coke, which is an essential input into blast furnace steel production, indicates an exceptional product on all specifications. High grade and ultra-high grade anthracite is a widely used input in the steel manufacturing process replacing between 10% and 30% of metallurgical coke used in the blast furnace. Anthracite is also used in the manufacture of specialty steels and alloys, electric arc furnaces, ore sintering, charge carbon, reductant and cathode pastes as an alternative to graphite. CROSS SECTIONS An example cross section for the bulk sample area is outlined in the following diagram with cross section A-B relating to the location of Bulk Sample A. The cross sections illustrate the long gentle dipping limbs of the #70 seam which are well suited to a low capital room and pillar adit mining operation for the first phase of production. The #40 seam is also shown which offers future production potential. Groundhog Anthracite Project Cross Section: A Groundhog Anthracite Project Cross Section: A Groundhog Anthracite Project Cross Section: A Groundhog Anthracite Project Cross Section: A –––– BBBB

Bulk sample Bulk sample Bulk sample Bulk sample cross sectioncross sectioncross sectioncross section

#70

#40

Bulk Sample “A” Focus Area SurfaceSurfaceSurfaceSurface

Project

Boundary

DHGH12-07

DHGH13-25

DHGH12-05


APPOINTMENT OF KEY CONSULTANTS FOR STAGE 1 MINE DEVELOPMENT As part of the PFS, the geological model was completed by Xstract Mining Consultants including seam correlation and coal quality interpretation. This geological model has now been provided to Brisbane-based coal mining and engineering consultancy group Valzan Pty Ltd (ValzanValzanValzanValzan), which has been engaged to complete mine planning, mine design and engineering for Stage 1 Mine Development at Groundhog. The principals of Valzan have in excess of 30 years’ experience in the coal industry across QLD and NSW, predominantly in new mine development and major mine expansion. The final report will be incorporated into the PFS along with other independent reports. The Company remains on track to complete the PFS by the end of Q1 2014.

BULK SAMPLE MINE DESIGN & ENGINEERING

The Company is on track for first commercial extraction at Groundhog, by way of a bulk sample, in Q4 2014. DMT Geosciences Ltd, a wholly owned subsidiary of German-based DMT GmbH & Co. KG (DMTDMTDMTDMT), has been engaged to complete mine design and engineering for the bulk sample. DMT has a long-standing history servicing the open-cut and underground coal industry in Canada including the delivery of scoping studies and prefeasibility studies for coal projects in British Columbia and Alberta. Specific projects include Grand Cache Mine, Wolf Mountain Mine as well as servicing companies such as HD Mining International Ltd on its bulk sample campaign (Murray River Project), Hillsborough Resources Limited on its portal location and engineering (Peace River Coalfield) and Western Canadian Coal on its mine expansion (Tumbler Ridge Project). DMT will be responsible for the portal engineering design and the design of the initial “room and pillar” adit for the extraction of the bulk sample. EXTENSION OF MINES ACT PERMIT GRANTED On 11 October 2013, the Company announced that, after considering Atrum’s application and consulting with the relevant authorities and local First Nations groups, the Ministry of Energy and Mines (British Columbia) has granted an extension to its Mines Act permit for a further five years at Groundhog.


Commenting on the extension of the Mines Act permit, Managing Director Dr Eric Lilford stated: “This is an important permitting milestone for Atrum as we prepare for next year’s bulk sample and test shipment program.” The Mines Act permit includes 15 contiguous coal licences at Groundhog and importantly includes the northern zone where a bulk sample and test shipment program is planned for 2014. PORT CAPACITY SECURED AT STEWART On 28 July 2013, the Company executed a Land Reservation and Terminal Services Agreement with Stewart Bulk Terminals (SBTSBTSBTSBT) and separately executed a Memorandum of Understanding with Stewart World Port (SWPSWPSWPSWP). Mayor of Stewart, Galina Durant, stated: "Stewart is ready for the opportunities presented by the clean, environmentally friendly mining industry. Mining is an important part of our economy and we look forward to working with Atrum to unlock the economic potential of the region."

STEWART BULK TERMINALS The Company has executed a Terminal Services Agreement and Land Reservation Agreement with SBT (SBT AgreementsSBT AgreementsSBT AgreementsSBT Agreements). This secures the shipping requirements for storage and loading of anthracite coal mined and transported from the proposed Groundhog mine approximately 150km away, through the Port of Stewart, British Columbia. Under the SBT Agreements, Atrum can export up to 1.5Mtpa of anthracite from SBT at agreed and competitive port handling charges, on a non ‘take or pay’ arrangement. There are also provisions for the allocation to Atrum of higher coal handling volumes at SBT in the event that an upgrade to capacity beyond its allocated 1.5Mtpa occurs. Anthracite coal extracted from the proposed Groundhog mine can be transported by truck initially using a coal haulage road from the mine site to Highway 37, an existing paved two-lane highway used by other resource companies to transport commodities such as copper and nickel concentrate to SBT.

Stewart Bulk Terminal existing loading berthStewart Bulk Terminal existing loading berthStewart Bulk Terminal existing loading berthStewart Bulk Terminal existing loading berth

Stewart Bulk Terminal existing storage facilityStewart Bulk Terminal existing storage facilityStewart Bulk Terminal existing storage facilityStewart Bulk Terminal existing storage facility


SBT has a berthing structure that can receive panamax and handymax vessels, ideally suited to the transport of high value anthracite lump and fines. Vessel loading rates are currently 700 to 800 tonnes per hour equating to a full ship loading cycle of 31.3 to 57.1 hours. There is scope to optimise the berth handling and loading rates. The SBT Agreements include provisions for the reservation of land and appropriate space for the construction and maintenance of a coal storage silo(s) including an area of approximately 2,500m2, as well as the use of the existing loading facilities to meet the anticipated monthly loading requirements of the proposed Groundhog mine. Under the SBT Agreements, SBT will construct and maintain the coal storage silo(s) for exclusive use by Atrum. The proposed expansion area at SBT provides the ideal location for the coal storage silo(s) due to its close proximity to the loading berth. SBT is currently excavating and building the foundations at the expansion site. STEWART WORLD PORT

The Company has signed a Memorandum of Understanding (MOUMOUMOUMOU) with SWP for the export of up to a further 5Mtpa of anthracite and associated high quality coal products from the proposed Groundhog mine. SWP is currently under construction and is expected to be able to supply the Company’s planned expanding coal handling needs from 2016. SWP is currently accessible by barge and has started the first of two construction phases, as follows:

� Phase I construction will extend the existing Cassiar Dock to deep water and will significantly improve barge access to the port. Phase I construction is expected to be completed by year end 2013 and be operational by early 2014.

� Permitting for Phase II construction is underway. Once Phase II construction is complete, the facility will provide for mineral concentrate loading, RORO, and all manner of inbound and outbound break bulk cargo.

SWP will be a modern facility offering the latest in loading, storage, and crane technology to ensure customer cargo is handled efficiently and effectively.

Stewart Bulk Terminals Stewart World Port dock under constructionStewart World Port dock under constructionStewart World Port dock under constructionStewart World Port dock under construction Stewart World Port aerial viewStewart World Port aerial viewStewart World Port aerial viewStewart World Port aerial view


The MOU with SWP provides Atrum with the flexibility required during the ramp up phases of production at Groundhog. It is proposed that anthracite will similarly be transported by road from the Groundhog mine to SWP using a combination of existing paved highways, Forest Service Roads and private coal haulage roads, the majority of which are already constructed and being maintained. The deep sea Port of Stewart provides coal handling capacity for 365 days of the year with no freezing restrictions. It has the depth capacity of handling panamax and cape size vessels and is in close proximity to the proposed Groundhog mine. SBT and SWP will enable the Company to maintain a low capital entry to production and take advantage of cost-effective transportation and export of its high quality anthracite and ultra-low volatile PCI coals to key consumers.

NASKEENA COAL PROJECT ACQUISITION OF CONTIGUOUS LICENCES AT NASKEENA PROJECT On 18 December 2013, the Company announced that it had entered into an agreement to acquire 1,500 hectares of coal licence applications adjacent to the Company’s Naskeena Coal Project (NaskeenaNaskeenaNaskeenaNaskeena) in British Columbia, Canada. Commenting on acquisition agreement, Executive Director Mr Gino D’Anna said: “This recent acquisition marks the close of a successful year-long consolidation campaign and provides us with what we believe to be all of the prospective tenure in the Naskeena coalfield. We look forward to commencing maiden exploration at this exciting project in 2014.” The acquisition will provide the Company with a consolidated position of 12,900 hectares of coal tenure prospective for metallurgical coal. The acquisition and resulting consolidation of Naskeena represents a significant land foot-print within the Naskeena Coalfield and ‘locks up’ the known coal bearing geology. Naskeena has been the subject of relatively limited exploration. However, historical mapping, trenching, sampling and drilling carried out by previous explorers identified significant coal potential and exploration upside in the area. The Naskeena project, located approximately 50km from the town-site of Terrace (BC), offers year round access for exploration and development and is favourably located close to road, rail and port infrastructure.

CORPORATE COMPLETION OF PRIVATE PLACEMENT The Company raised $18.5 million (before costs) at an issue price of A$1.40 per ordinary share. The Placement was equivalent to 8% of the previous fully diluted capital structure. The Placement closed heavily oversubscribed and was strongly supported by both new and existing institutional and sophisticated investors.


Blackwood Capital Limited acted as Lead Manager and Bookrunner for the Placement. The strong participation from institutional investors is a significant validation of the Groundhog Anthracite Project. The funds raised from the Placement will be used to accelerate development at Groundhog as it moves towards completion of a Pre-feasibility Study and obtains further permitting. SPIN-OUT OF NASKEENA, PEACE RIVER AND BOWRON RIVER COAL PROJECTS

On 18 September 2013, Atrum announced plans to spin-out its Naskeena, Bowron River and Peace River coal assets (“Exploration Assets”), located in British Columbia, Canada. Commenting on the spin-out plan, Managing Director Dr Eric Lilford stated: “This is a huge win for shareholders. They will benefit from additional returns by way of shares in an exciting new exploration venture in one of the most attractive mining jurisdictions in the world, leaving Atrum free to focus its management time and balance sheet on developing the tier 1 Groundhog Project.” The Company is currently finalising the capital structure and management team for the spin-out vehicle as well as determining the timing for an Atrum shareholders meeting to approve and facilitate the timetable and subsequent ASX listing. The spin-out will allow Atrum to concentrate on the development of Groundhog, which is currently in the process of completing a pre-feasibility study, together with providing shareholders with exposure to the exploration upside of the Naskeena, Peace River and Bowron River coal projects. “The Board and management of Atrum consider this to be the most appropriate method of delivering long term shareholder value whilst enabling exploration funding to be allocated to these three exciting projects," said Dr Lilford. The Company has lodged the Notice of Work (NoWNoWNoWNoW) with the BC Ministry of Energy and Mines including the newly acquired licence. The granting of the Naskeena NoW is expected to occur during February 2014, and the Company plans to twin historical drill holes to confirm coal seam thickness and quality. The divestment structure and commensurate IPO of the Naskeena, Bowron River and Peace River coal projects has now been finalised with existing Atrum shareholders to receive a substantial equity position. The Company is finalising a submission to the Australian Taxation Office (ATOATOATOATO) in relation to obtaining demerger relief for the Company and its shareholders. A Notice of Meeting and Explanatory Statement detailing the precise terms of the spin-out is currently being prepared for distribution to shareholders of Atrum in early 2014. The spin-out will enable existing Atrum shareholders to participate in the exploration and development of these exciting projects and allows the Company to focus on the development of Groundhog. The Company is targeting the spin-out IPO for H1 2014.


ATRUM INFRATRUCTURE & LOGISTICS

Contemporaneous with the development of its world-class Groundhog deposit, the Company is committed to delivering shareholder value beyond mine development. This includes the spin-out of its greenfield Naskeena, Peace River and Bowron River coal assets, where preparation for a H1 2014 IPO is progressing. In keeping with this philosophy, the Company has established “Atrum Infrastructure and Logistics” (“AILAILAILAIL”) as a separate business unit which has been setup to capture and drive additional shareholder value associated with Groundhog’s low risk infrastructure and the opportunities it presents. The Company has secured a binding ‘non take or pay’ port agreement for an initial 1.5Mtpa with Stewart Bulk Terminals. It has also identified an opportunity to become involved in a new port development in Stewart, the Stewart World Port, where it has secured a further 5Mtpa under a non-binding Memorandum of Understanding. The Company believes that as the owner of the world’s largest ultra-high grade anthracite deposit it has the ability to become a cornerstone participant in the growth of local roads, rail, port, power services and growth of the local communities as a whole. This uncovers a number of valuable opportunities where the Company can leverage its participation and capture additional value. This value can be realised through strategic infrastructure arrangements that in many cases, require little or no capital contribution from Atrum. As a first move, the Company has appointed Robert Mitchell as Business Development Manager (AIL) to drive these opportunities. Mr Mitchell BSc, BE (Hons), Dip PM, CAPM will head the new business unit, having held a senior role in Rio Tinto’s rail division where he led pre-feasibility and feasibility studies. He has worked on a number of major infrastructure projects for Rio Tinto and other blue chip miners, including BHP Billiton Iron Ore’s Rapid Growth Project 5 rail project (RGP5). For further information contact:For further information contact:For further information contact:For further information contact: Eric Lilford Eric Lilford Eric Lilford Eric Lilford Russell MoranRussell MoranRussell MoranRussell Moran Gino D’AnnaGino D’AnnaGino D’AnnaGino D’Anna Managing Director Executive Director Executive Director MMMM +61 424 757 452 MMMM +61 415 493 993 MMMM +61 400 408 878 [email protected]@[email protected]@atrumcoal.com [email protected]@[email protected]@atrumcoal.com [email protected]@[email protected]@atrumcoal.com James ChisholmJames ChisholmJames ChisholmJames Chisholm Nathan RyanNathan RyanNathan RyanNathan Ryan Chairman Investor Relations MMMM +61 419 256 690 MMMM +61 420 582 887 [email protected]@[email protected]@atrumcoal.com [email protected]@[email protected]@atrumcoal.com


Exploration TargetsExploration TargetsExploration TargetsExploration Targets

This announcement refers to Exploration Targets as defined under Section 18 of the JORC Code. The Exploration Target 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 Exploration Target being delineated as a mineral resource.

Competent Person StatementCompetent Person StatementCompetent Person StatementCompetent Person Statement

In accordance with the Australian Securities Exchange requirements, the technical information contained in this announcement in relation to the JORC Compliant Coal Resource for the Groundhog Anthracite Project in Canada has been reviewed by Mr Ian de Klerk of Xstract Mining Consultants Pty Ltd.

The Coal Resources documented in this release are stated in accordance with the guidelines set out in the JORC Code, 2004.

They are based on information compiled and reviewed by Mr. Ian de Klerk who is a Member of the Australasian Institute of Mining and Metallurgy (Member #301019) and is a full time employee of Xstract Mining Consultants Pty Ltd. He has more than 20 years’ experience in the evaluation of coal deposits and the estimation of coal resources. Mr. de Klerk has sufficient experience that is relevant to the style of mineralisation and type of deposit under consideration to qualify him as a Competent Person as defined in the JORC Code, 2004. Neither Mr. de Klerk nor Xstract have any material interest or entitlement, direct or indirect, in the securities of Atrum Coal NL or any companies associated with Atrum Coal NL. Fees for work undertaken are on a time and materials basis. Mr. de Klerk consents to the inclusion of the Coal Resource based on his information in the form and context in which it appears.

Forward Looking StatementsForward Looking StatementsForward Looking StatementsForward Looking Statements

This release includes forward looking statements. Often, but not always, forward looking statements can generally be identified by the use of forward looking words such as “may”, “will”, “expect”, “intend”, “plan”, “estimate”, “anticipate”, “continue”, and “guidance”, or other similar words and may include, without limitation statements regarding plans, strategies and objectives of management, anticipated production or construction commencement dates and expected costs or production outputs. Forward looking statements in this release include, but are not limited to, the capital and operating cost estimates and economic analyses from the Study. Forward looking statements inherently involve known and unknown risks, uncertainties and other factors that may cause the company’s actual results, performance and achievements to differ materially from any future results, performance or achievements. Relevant factors may include, but are not limited to, changes in commodity prices, foreign exchange fluctuations and general economic conditions, increased costs and demand for production inputs, the speculative nature of exploration and project development, including the risks of obtaining necessary licences and permits and diminishing quantities or grades of resources or reserves, political and social risks, changes to the regulatory framework within which the company operates or may in the future operate, environmental conditions including extreme weather conditions, recruitment and retention of personnel, industrial relations issues and litigation. Forward looking statements are based on the company and its management’s good faith assumptions relating to the financial, market, regulatory and other relevant environments that will exist and affect the company’s business and operations in the future. The company does not give any assurance that the assumptions on which forward looking statements are based will prove to be correct, or that the company’s business or operations will not be affected in any material manner by these or other factors not foreseen or foreseeable by the company or management or beyond the company’s control. Although the company attempts to identify factors that would cause actual actions, events or results to differ materially from those disclosed in forward looking statements, there may be other factors that could cause actual results, performance, achievements or events not to be anticipated, estimated or intended, and many events are beyond the reasonable control of the company. Accordingly, readers are cautioned not to place undue reliance on forward looking statements. Forward looking statements in this release are given as at the date of issue only. Subject to any continuing obligations under applicable law or any relevant stock exchange listing rules, in providing this information the company does not undertake any obligation to publicly update or revise any of the forward looking statements or to advise of any change in events, conditions or circumstances on which any such statement is based.


TENEMENT LIST


TABLE 1 - SAMPLING TECHNIQUES AND DATA

Criteria JORC Code explanation Commentary

Sampling

techniques

• Nature and quality of sampling (eg

cut channels, random chips, or

specific specialised industry standard

measurement tools appropriate to

the minerals under investigation, such

as down hole gamma sondes, or

handheld XRF instruments, etc).

These examples should not be taken

as limiting the broad meaning of

sampling.

• Include reference to measures taken

to ensure sample representivity and

the appropriate calibration of any

measurement tools or systems used.

• Aspects of the determination of

mineralisation that are Material to

the Public Report.

• In cases where ‘industry standard’

work has been done this would be

relatively simple (eg ‘reverse

circulation drilling was used to obtain

1 m samples from which 3 kg was

pulverised to produce a 30 g charge

for fire assay’). In other cases more

explanation may be required, such

as where there is coarse gold that

has inherent sampling problems.

Unusual commodities or

mineralisation types (eg submarine

nodules) may warrant disclosure of

detailed information.

• For the Atrum Coal 2013 exploration

program all coal seams intersected

were sampled. Coal plies were

sampled discretely on the basis of

lithological characteristics and quality.

All non-coal material and partings

were included with the lower coal ply

and noted in the lithological

description. Non-coal interburden was

sampled separately.

• The immediate roof and floor samples

were submitted for geotechnical

testing.

• All coal and roof and floor dilution

samples were double bagged at site

and marked with sample number,

date, hole and project. These were

retained on site until geophysical

corrections confirmed representative

core recovery of the seam and

samples. The qualified samples were

then transported to the laboratory via

courier.

• Coal Quality samples from the Atrum

Coal Drilling program were sent to

Loring Laboratories and ALS

Laboratories in Calgary and

Vancouver, respectively.

• All coal quality samples were prepared

and analysed using Canadian and

International Standard testing

methodologies.

Drilling

techniques

• Drill type (eg core, reverse

circulation, open-hole hammer,

rotary air blast, auger, Bangka, sonic,

etc) and details (eg core diameter,

triple or standard tube, depth of

diamond tails, face-sampling bit or

other type, whether core is oriented

and if so, by what method, etc).

• All coal quality holes were cored

(partially or fully) using a HQ size core

barrel producing a 63.3 mm core

diameter.

• Large diameter drill holes for bulk

material extraction were cored using a

PQ size core barrel producing an 83.1

mm core diameter.

Drill sample

recovery

• Method of recording and assessing

core and chip sample recoveries

and results assessed.

• Measures taken to maximise sample

recovery and ensure representative

nature of the samples.

• An assessment of core recovery was

completed by comparing the

recovered thickness measured during

geological logging and by the driller,

to geophysical picked thicknesses from

the geophysical logs.

• Volumetric analysis of samples was

conducted on the Atrum Coal

exploration program



• Whether a relationship exists

between sample recovery and

grade and whether sample bias may

have occurred due to preferential

loss/gain of fine/coarse material.

• The analysis was based on sample

mass received versus expected sample

mass derived from sample length by

core diameter by apparent Relative

Density

• If sample mass was below 95% a

separate exercise interrogating the

linear recovery via photos and logs

was undertaken to decide whether the

sample could be included and not

bias the results.

Logging • Whether core and chip samples

have been geologically and

geotechnically logged to a level of

detail to support appropriate Mineral

Resource estimation, mining studies

and metallurgical studies.

• Whether logging is qualitative or

quantitative in nature. Core (or

costean, channel, etc) photography.

• The total length and percentage of

the relevant intersections logged.

• All core was geologically logged,

marked and photographed before

sampling. Geological and

geotechnical features were identified

and logged.

• All drill holes have been geophysical

logged with a minimum density,

calliper, gamma and verticality unless

operational difficulties prevented full

or partial logging of the drill hole.

• The calibration of the geophysical

tools was conducted by the

geophysical logging company.

Century Wireline Services

Sub-sampling

techniques

and sample

preparation

• If core, whether cut or sawn and

whether quarter, half or all core

taken.

• If non-core, whether riffled, tube

sampled, rotary split, etc and

whether sampled wet or dry.

• For all sample types, the nature,

quality and appropriateness of the

sample preparation technique.

• Quality control procedures adopted

for all sub-sampling stages to

maximise representivity of samples.

• Measures taken to ensure that the

sampling is representative of the in

situ material collected, including for

instance results for field

duplicate/second-half sampling.

• Whether sample sizes are

appropriate to the grain size of the

material being sampled.

• All core samples were double bagged

on site and transported to the

Laboratory for testing.

• Loring Laboratories and ALS

Laboratories comply with Canadian

and International Standards for sample

preparation and sub sampling.

• Large wash samples were pre-treated

and dry sized and various sizes before

sample splitting and analysis.

Proximate analysis was completed on

a portion of the original sample.

• Raw analysis procedure keeps ½ of

the sample as reserve.

Quality of

assay data

and

laboratory

tests

• The nature, quality and

appropriateness of the assaying and

laboratory procedures used and

whether the technique is considered

partial or total.

• For geophysical tools, spectrometers,

handheld XRF instruments, etc, the

parameters used in determining the


Laboratories comply with the

Canadian and International Standards

for coal quality testing and are

certified.

• Geophysical tools were calibrated by

the logging company Century Wireline

Services.



analysis including instrument make

and model, reading times,

calibrations factors applied and their

derivation, etc.

• Nature of quality control procedures

adopted (eg standards, blanks,

duplicates, external laboratory

checks) and whether acceptable

levels of accuracy (ie lack of bias)

and precision have been

established.

• The density measurement is calibrated

to precise standards and where

possible validated in a calibration

hole.

Verification of

sampling and

assaying

• The verification of significant

intersections by either independent

or alternative company personnel.

• The use of twinned holes.

• Documentation of primary data,

data entry procedures, data

verification, data storage (physical

and electronic) protocols.

• Discuss any adjustment to assay

data.


Laboratories comply with the

Canadian and International Standards

for coal quality testing and as such

conduct the verifications for coal

quality analysis outlined in the

standards.

• Coal Quality results were verified by

Xstract Mining Consultants Pty Ltd

before inclusion into the geological

model and resource estimate.

• No adjustments have been made to

the Coal quality data.

Location of

data points

• Accuracy and quality of surveys used

to locate drill holes (collar and down-

hole surveys), trenches, mine

workings and other locations used in

Mineral Resource estimation.

• Specification of the grid system used.

• Quality and adequacy of

topographic control.

• Professional Survey of the coal quality

boreholes for the Atrum Coal

exploration program was completed

by DMT Geosciences.

Data spacing

and

distribution

• Data spacing for reporting of

Exploration Results.

• Whether the data spacing and

distribution is sufficient to establish

the degree of geological and grade

continuity appropriate for the Mineral

Resource and Ore Reserve

estimation procedure(s) and

classifications applied.

• Whether sample compositing has

been applied.

• Data spacing sufficient to establish the

degree of geological and grade

continuity for inclusion as Inferred,

Indicated and Measured Resource

estimation procedures were

employed.

• Multiple samples were obtained for

some seams within the Groundhog

Project area. As such, where

appropriate, sample compositing has

been completed. Samples were

weighted against sample thickness

and in situ RD.

Orientation of

data in

relation to

geological

structure

• Whether the orientation of sampling

achieves unbiased sampling of

possible structures and the extent to

which this is known, considering the

deposit type.

• A combination of vertical and inclined

drill holes were completed from the

same drill pad to ensure that a suitable

understanding of the geological

structure and orientation of the

geology was captured.



• If the relationship between the drilling

orientation and the orientation of key

mineralised structures is considered

to have introduced a sampling bias,

this should be assessed and reported

if material.

Sample

security

• The measures taken to ensure

sample security.

• Sample Security was ensured under a

chain of custody between Atrum Coal

personnel on site and Loring and ALS

laboratories.

Audits or

reviews

• The results of any audits or reviews of

sampling techniques and data.

• Sampling was undertaken by Atrum

Coal personnel. Loring and ALS

undertook internal audits and checks

in line with the Canadian and

International standards


TABLE 2 - REPORTING OF EXPLORATION RESULTS


Mineral

tenement and

land tenure

status

• Type, reference name/number, location and

ownership including agreements or material

issues with third parties such as joint ventures,

partnerships, overriding royalties, native title

interests, historical sites, wilderness or national

park and environmental settings.

• The security of the tenure held at the time of

reporting along with any known impediments

to obtaining a licence to operate in the

area.

• Coal tenures relate to the

Groundhog Anthracite project,

which is 100% owned by Atrum

Coal

• The project consists of 18

granted coal licences and 8

coal licence applications

totalling 22,815 hectares

• Security of tenure is not

compromised and there is no

known impediments

Exploration

done by other

parties

• Acknowledgment and appraisal of

exploration by other parties.

• Exploration drilling within and in

close proximity to the

Groundhog project has been

reviewed and evaluated for

data purposes

Geology • Deposit type, geological setting and style of

mineralisation.

• The Groundhog Project lies

within the Bowser Basin.

• The Bowser Basin, which is the

largest contiguous basin in the

Canadian Cordillera,

developed as a result of

tectonic compression and

uplift of the Coast Mountains

during the Upper Jurassic.

• The dominant structural feature

is the northwest-southeast

trending Biernes Synclinorium. It

resulted from northeast-

southwest compression during

the first phase of deformation

(“F1”). Thrusting related to the

F1 deformation is more intense

in the southern part of the

Groundhog Coalfield than in

the northern part.

• The second, less intense, phase

of deformation (“F2”) resulted

from northwest-southeast

compression. The F2

deformation is superimposed

on the broad, open type of F1

folding. The F2 imprint is visible

in a series of plunge changes in

the F1 folds in the order of up

to 5°.



• F2 thrusts are generally flat lying

and related to the hanging

wall of drag folds.

Displacement tends to be

along bedding surfaces. The F2

fold structures superimposed

on the major F1 synclinorium

vary in wave length from 100 m

to 700 m and vary in amplitude

up to 100 m.

Drill hole

Information

• A summary of all information material to the

understanding of the exploration results

including a tabulation of the following

information for all Material drill holes:

o easting and northing of the drill hole

collar

o elevation or RL (Reduced Level –

elevation above sea level in metres) of

the drill hole collar

o dip and azimuth of the hole

o down hole length and interception depth

o hole length.

• If the exclusion of this information is justified

on the basis that the information is not

Material and this exclusion does not detract

from the understanding of the report, the

Competent Person should clearly explain

why this is the case.

• All drill holes have been

modelled from vertical,

although hole deviation (from

vertical) has been recorded

for all drill holes.

Data

aggregation

methods

• In reporting Exploration Results, weighting

averaging techniques, maximum and/or

minimum grade truncations (eg cutting of

high grades) and cut-off grades are usually

Material and should be stated.

• Where aggregate intercepts incorporate

short lengths of high grade results and longer

lengths of low grade results, the procedure

used for such aggregation should be stated

and some typical examples of such

aggregations should be shown in detail.

• The assumptions used for any reporting of

metal equivalent values should be clearly

stated.

• All seams where multiple coal

quality samples were taken

were given a composite coal

quality value. This composite

value was generated within

the Minescape software and

was weighted on thickness

and in situ RD. In situ RD was

only weighted against

thickness.

Relationship

between

mineralisation

widths and

intercept

lengths

• These relationships are particularly important

in the reporting of Exploration Results.

• If the geometry of the mineralisation with

respect to the drill hole angle is known, its

nature should be reported.

• The inclusion of boreholes from

neighbouring areas has given

the model a reasonable

amount of lateral continuity in

all directions.



• If it is not known and only the down hole

lengths are reported, there should be a clear

statement to this effect (eg ‘down hole

length, true width not known’).

• Point of observation spacing

has been extrapolated in a

maximum of a 2,000 m radius

from the drill hole.

• Seam thicknesses have been

corrected to geophysics to

ensure accuracy

Diagrams • Appropriate maps and sections (with scales)

and tabulations of intercepts should be

included for any significant discovery being

reported These should include, but not be

limited to a plan view of drill hole collar

locations and appropriate sectional views.

• All appropriate diagrams are

contained within the main

body of the report

Balanced

reporting

• Where comprehensive reporting of all

Exploration Results is not practicable,

representative reporting of both low and

high grades and/or widths should be

practiced to avoid misleading reporting of

Exploration Results.

• All available exploration data

for the Groundhog Project

area have been collated and

reported.

Other

substantive

exploration

data

• Other exploration data, if meaningful and

material, should be reported including (but

not limited to): geological observations;

geophysical survey results; geochemical

survey results; bulk samples – size and

method of treatment; metallurgical test

results; bulk density, groundwater,

geotechnical and rock characteristics;

potential deleterious or contaminating

substances.

• No further exploration data

were gathered and or utilised.

Further work • The nature and scale of planned further work

(eg tests for lateral extensions or depth

extensions or large-scale step-out drilling).

• Diagrams clearly highlighting the areas of

possible extensions, including the main

geological interpretations and future drilling

areas, provided this information is not

commercially sensitive.

• Further work consisting of

additional drilling and seismic

activity is being evaluated.

atrum coal - quarterly activities report for the period...

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