Spitfire Oil Limited (“Spitfire” or the “Company”) is very pleased to announce an increase for its 100% owned Salmon Gums lignite deposit in the south-east of Western Australia. The reported Resource of lignite (at 4m coal thickness & 45% ashdb cut-off) is estimated to be:
This new resource represents a 69% increase over the 519 million tonnes (at 5m thickness & 30% ashdb cut-off) Inferred Resource of lignite which supported the Company’s admission on AIM in July 2007. This substantial resource is the result of a 1 ½ year drilling campaign involving 420 new drilled and cored holes for a total of 12,624 metres. The estimate in accordance with the ‘Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves’ (The JORC Code, 2004) was generated through a thorough definition, audit and verification process managed by independent geological consultants G&S Resources.
Further, on 6 July 2009, the Company applied for 4 mining leases in addition to the 2 leases applied for in July 2008, bringing the total area under application for mining leases to 27,660 hectares. The applications for extensive mining leases covering the resource are an important milestone on the path to transforming the Salmon Gums project into commercial production.
In addition, if the current oil yields achieved with the test reactors in the Curtin University laboratory can be maintained at an industrial scale, then the reported Resource of lignite would correspond to an in-situ pyrolysis oil resource in the range of 330 to 420 million barrels, an increase in the range of 65% to 110% over the 200 million barrels in-situ oil volumes which supported the company’s admission onto AIM.
The Company intends, over the next three quarters, to focus its efforts on completing its technology definition work with emphasis now shifting from the generation of oil to the upgrading of the pyrolysis oil into its maximum saleable form and completing its pre-feasibility studies.
Chairman Mladen Ninkov commented “We are delighted with the sustained increase in the resource at Salmon Gums which continues to exceed our initial expectations. The current plans to produce approximately 20,000 barrels of oil per day for 25 years with the previously defined 400 million tonnes lignite resource will be significantly improved by this huge increase in the resource, reported according to JORC standards, which, at first glance, allows for a much longer life project with higher long term production rates. We could not be more pleased at this stage.”
|Resource Block||Seam Interval||Seam||Resource Class||Average Seam Thickness (m)||Average Density gm/cc||Average Ash (%db)||Average Oil Yield (l/t) LTOM15C||Average Total Moisture (% ar)||Average Volatile Matter (% db)||Area (m2 *103)||Indicated Resource (Million tonnes)||Inferred Resource (Million tonnes)|
|Far North||Cumulative coal thickness >4m||GL4||Inferred||7.3||1.20||26.1||107||58.4||41.5||19173.5||168.2|
|Minshull||Cumulative coal thickness >4m||GL4||Indicated||7.7||1.21||27.6||123||57.4||42.0||18472.2||171.6|
|Collison||Cumulative coal thickness >4m||GL4||Indicated||8.5||1.22||29.2||107||53.5||39.6||16349.1||169.4|
|Pixie||Cumulative coal thickness >4m||GL4||Inferred||7.1||1.20||25.2||128||53.3||42.4||21616.1||183.2|
Date: July 2009
Resource estimation of the Salmon Gums Lignite Project was limited by the various geological considerations and boundary criteria referred to in the July 2009, statement of coal resources.
Within the Salmon Gums Lignite Project area (limited by the currently inferred Eocene palaeochannel boundary and the extent of exploration drilling) the deposit is estimated to contain Indicated Resources for the GL4 and GL2 Seams of 406.1 million tonnes (Mt). A further 470 Mt of Inferred Resources have been estimated to be present in the GL4, GL2 and GL1 Seams.
The July 2009 resource estimate for the Indicated and Inferred Resources are not directly compatible with those of the 2002 estimation because of changed cut-off criteria (i.e. ash content, coal thickness) and differing regional extents. However, as a gross comparison within the Collison, Minshull and Pixie areas, the 2002 estimate of 519 Mt, has been increased to approximately 705 Mt. Increased resources can be attributed largely to extensive exploration drilling in 2007-2008, leading to considerable extension of the resource area, in combination with other unquantified factors including changes in cut-off criteria and varying density estimation and modelling methodologies.