SOURCE: Waratah Coal Inc.

October 24, 2007 06:00 ET

Waratah Increases Resource to 1.470 Billion Tonnes of Coal in Galilee Basin

Total Inferred Resources Now 2.145 Billion Tonnes

VANCOUVER, BC--(Marketwire - October 24, 2007) - Waratah Coal Inc. (TSX-V: WCI) today announced the upgrading of its estimate from 1.055 billion tonnes to 1.470 billion tonnes of inferred coal resource at Waratah's South Alpha EPC 1040 permit in the Galilee Basin, Queensland, Australia.

This revised estimate comes with the inclusion of recently drilled holes and the return of vital borecore analysis.

This resource lies 60 kilometres south of the 675 million tonne inferred coal resource at Waratah's North Alpha EPC 1053 project, announced September 10, 2007.

Highlights include:

--  Highly continuous, shallow dipping coal seams
--  High-quality, low-sulphur thermal coal
--  60 kilometres along strike from Waratah's 675 mt North Alpha resource
--  Drilling continues to track the seam strike to the south in the South
    Alpha lease.
    

SRK Consulting, independent technical advisors to Waratah, have analysed data from 26 open core and 14 partially cored drill holes to estimate the following inferred resource category on the northern portion of the South Alpha permit:

Inferred Resources South Alpha, October 2007
--------------------------------------------------
 Seam       Seam Thickness  Tonnage      Coal Area
                 (m)         (Mt)          (km(2))
--------------------------------------------------
B               6.14          515            59.7
--------------------------------------------------
C               1.49          210            99.5
--------------------------------------------------
DT              2.28          340           106.6
--------------------------------------------------
DB1             0.80          105            95.5
--------------------------------------------------
DB2             1.93          300           110.4
--------------------------------------------------
Total                       1,470
--------------------------------------------------

Drilling continues with two rigs moving south on 2 kilometre spacing and the resource will be periodically updated as further results come to hand.


As stated by SRK:

"These resources are expected to extend to the south of the drilling area as indicated by the strike and dip of the strata. The northern boundary of EPC 1040 is located at the southern boundary of existing defined JORC Code compliant resources at Alpha and Kevin's Corner of 2.05 billion tonnes of coal. This boundary is artificial and constrained by a property boundary fence line. The prospect generally has the potential to produce high tonnages of good quality coals at shallow overburden depths, and is located near roads, rail and basic infrastructure. The structurally benign geological environment may make the seams amenable to underground longwall mining."

(Please visit www.waratahcoal.com to see Figure 1, Location of Waratah Coal's Galilee Basin Exploration Permits Coal (EPCs))

Coal quality tests confirm that the seams average 0.5% sulphur, with an average calorific value of 26 MJ/kg or 11,202 Btu/lb on a washed or beneficiated basis. For comparison, the Barlow Jonker Index of spot prices is currently US$67 per tonne FOB as of September 13, 2007 and is based on export thermal coal at the Newcastle, Australia coal terminal with a calorific value of 28 MJ/kg and a sulphur content of 0.8%.

Mr. Peter Lynch, CEO of Waratah Coal, noted, "We now have identified a combined resource of 2.145 billion tonnes in the Galilee Basin, with the coal seams open along strike and down dip. Waratah continues to study various mining and infrastructure options necessary to efficiently exploit these deposits and others in the Basin. At the same time, five drills will continue the process to expand and improve Waratah's resources."

Waratah Coal has been granted Exploration Permits -- Coal over 1,104 square kilometres in the Galilee Basin with a further 4,827 square kilometres in application. Waratah's North Alpha and South Alpha permits are adjacent to Hancock Prospecting Pty Ltd's MDLA 333 and EPC 570/MDLA 285 permits, which is reported to host a measured and indicated coal resources of 2.1 billion tonnes as reported in the Queensland Coal Resource Inventory, Queensland Coals 14th Edition 2003, Queensland Government, Department of Natural Resources and Mines.

(Please visit www.waratahcoal.com to see Figure 2, Location of 1.470Bt inferred coal resources on Waratah Coal's EPC 1040, Galilee Basin, Queensland, Australia and Figure 3, Cross section through the third line of drilling at Waratah Coal's EPC 1040, Galilee Basin, Queensland, Australia)

Waratah commissioned a full range of coal quality analyses on the cored sections on a ply-by-ply basis. The results were then composited into full seam sections and washability analyses were conducted at cumulative Float/Sink 1.50 (F1.50) fraction on the South Alpha coal. Results for the washed product are as follows:

                           WASHED COAL (F1.50)
--------------------------------------------------------------------
SEAM    Yield  Air Dried  Ash %  Volatile Fixed    Total   Calorific
                Moisture         Matter   Carbon   Sulfur %   Value
--------------------------------------------------------------------
          (%)   ad (%)    ad (%)   ad(%)    ad(%)   ad(%)  ad(MJ/kg)
--------------------------------------------------------------------
B***     56.4     8.1     18.4     30.3    43.2     0.37     23.81
--------------------------------------------------------------------
C        69.3     7.6     10.9     35.3    46.3     0.80     26.63
--------------------------------------------------------------------
DT       60.4     7.4     11.1     33.2    48.4     0.57     26.31
--------------------------------------------------------------------
DB1      85.5     6.5     10.4     34.2    49.1     0.46     27.27
--------------------------------------------------------------------
DB2      86.7     7.6      7.4     34.4    50.7     0.49     27.81
--------------------------------------------------------------------

**Only early F1.6 washability data available. No F1.50 washability data at
this date.

The announced resource is now based around a total of 24 partially cored and 16 infill chip holes for structural confidence. The drillholes were drilled by two truck-mounted Mayhew 1000 drilling rigs. Each drillhole was wireline logged by Geoscience Associates (Australia) Pty Ltd geophysical logging equipment. Bed resolution density, short spaced and long spaced density, gamma and calliper logs were run in all drillholes. These logs were used to clearly identify the seam correlations and core recovery. All cored sections were logged by the site geologist for detail lithological descriptions. Core losses were re-constructed from the wireline logs. After reconciliation with the wireline logs, seams were split into plies for laboratory analysis. Coal core samples were sealed in plastic bags and despatched to ACIRL Pty Ltd laboratories in Emerald, Australia for analysis. The samples were prepared in laboratory conditions in accordance with Australian standards.

The data used by SRK in this report were supplied by Waratah Coal's Exploration Manager, David Campbell. The data was adjusted to the downhole geophysical logs and these intervals were further validated by SRK's Senior Coal Geologist, Tri Yoso. SRK's validation process included cross checking the downhole geophysical logs with the data presented for uploading into the MINEX geological and mine planning software system, a worldwide industry proven system used primarily for coal mining operations. The Resource model and estimations were developed using MINEX.

The modelling algorithm used for generating the geological model is the MINEX Growth Technique, a proprietary 2-Dimensional gridding algorithm which calculates the most fitting surfaces for coal deposits, taking into account the regional trends together with the ability to honour the borehole data given the appropriate gridding parameters. The grid mesh size used for modelling the geology at South Alpha Coal Project is 50 metres and the coal tonnage calculations are based on a conservative default density of 1.40 grams per cubic centimetre.

To see maps and sections, visit the News and Events section of www.waratahcoal.com, or contact the company.

The seams in the Alpha area are sub-bituminous high volatile perhydrous coals suitable for use as thermal coal and potentially liquefaction, gasification and other petrochemical applications. There are 5 principal coal seams developed at the South Alpha Project which have defined continuity and significant resources. The seams dip gently (1 to 2 degrees) to the west, and appear to be structurally continuous with little, if any, faulting. The seams are within the Galilee Basin, which covers an area of 247,000 square kilometres in central Queensland. This basin is entirely intracratonic and is filled with Late Carboniferous to Middle Triassic sediments. These rocks are dominantly fluvial in origin with minor glacial material developed at the base of the succession. The Galilee Basin contains extensive coal deposits, although these are largely very deep except for the eastern margin, where the Waratah Coal South Alpha project lies. The basin is almost entirely unconformably overlain by the Jurassic - Cretaceous Eromanga Basin. The eastern margin of the basin is the only exposed component of the Permo - Triassic sequence. Within EPC 1040, Quaternary alluvials and Tertiary sands, clays and laterites unconformably overlay the distinctive grey-greenish Triassic mudstones and claystones of the Rewan Formation (Fm). The Rewan Fm, in turn, unconformably overlays the Late Permian shales, siltstones, sandstones and coal seams of the Bandanna Fm. The Quaternary sediments comprise of unconsolidated alluvial sands ranging in thickness from 0 m to 30m. The Tertiary comprise of unconsolidated to semi-consolidated sediments ranging in thickness from 30m to 125m. Within EPC 1040, the Quaternary and Tertiary combine to form a thick cover of overburden ranging from 95 m to 125 m over the Bandanna Fm. The Rewan Fm, consisting of Triassic competent claystones and siltstones, is situated unconformably between the overlying Tertiary and the underlying Late Permian Bandanna Fm. The Bandanna Fm and the Colinlea Sandstone comprises of lithic sandstone, siltstone, claystone, carbonaceous mudstone and five coal seams. The upper two (seams A and B) occur in the Bandanna Formation and the lower three (seams C, D & E) in the Colinlea Sandstone.

The Qualified Person for this resource estimate is Mr. Patrick Hanna, Fellow of the AusIMM and Principal Coal Geology Consultant with SRK Consulting, who conducted a site visit on EPC1040 in July, 2006.

The TSX Venture Exchange has not reviewed and does not accept responsibility for the adequacy or accuracy of this release.

Contact Information

  • For further information:

    Peter Lynch
    Waratah Coal
    President and CEO
    T: +61 7 3303 0692
    E-mail: Email Contact

    Henry Wright
    T: 604 681 5755
    E-mail: Email Contact