AQUILA RESOURCES LIMITED - ASX: AQA

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Description

Isaac Plains Coal Mining Operations

The Isaac Plains Coal Mine is located approximately 7 kilometres south east of the town of Moranbah in the Bowen Basin region of central Queensland. It is comprised of the Isaac Plains North and Isaac Plains South coal deposits, separated by a distance of approximately 15 kilometres. Mining operations were initially commenced at the Isaac Plains North deposit in late 2006 and included the construction of coal processing facilities and associated power, water, road and rail infrastructure. Subject to receipt of all regulatory approvals, the project is planned to ramp-up to its nameplate capacity of 2.8Mtpa of product in line with the current Phase 2/3 expansion at the Dalrymple Bay Coal Terminal which should be completed by April 2009. The product split from the project is 75% metallurgical coal and 25% thermal coal.

Integrated Isaac Plains Project

It is proposed that the Isaac Plains South deposit be developed later this year, subject to completion of regulatory approvals, as part of the Integrated Isaac Plains Project which involves mining operations at both deposits using a combination of truck and shovel and also dragline methods, with processing and railing occurring at the existing Isaac Plains North facilities. The Bucyrus-Erie 1370 dragline has been acquired and relocated from the United States to Mackay for refurbishment with a view to its initial introduction at Isaac Plains North in 2009, subsequently moving to Isaac Plains South in the latter part of the mine life.

Eagle Downs Coal Project

The Eagle Downs Coal Project is located some 7 kilometres south of the Isaac Plains Coal Project and is immediately adjacent to BMA’s Peak Downs Coal Mine in the Bowen Basin region of Queensland. Coal resources have been delineated within the Q seam, Harrow Creek Upper (HCU) seam, Harrow Creek Lower (HCL) seam and Dysart (DY) seam of the Permian Moranbah Coal Measures.

JB Mining Services Pty Ltd was commissioned to complete an updated JORC resource statement for the northern zone of the project based on data obtained from the Stage 1 and 2 exploration programmes. Further coal quality data was pending at year end, as part of the Stage 3/4 programme and will be incorporated into subsequent resource updates. The southern resource area is not included in the current project evaluation work and remains prospective for future exploration programmes.

Belvedere Coal Project

The Belvedere Coal Project is located 7 kilometres north-east of Moura in the southern part of the Bowen Basin region of Queensland. It is close to well established infrastructure including rail, power, water, sealed roads and local mining communities. The Belvedere Coal Project is a hard coking coal resource within the Baralaba Coal Measures that is potentially suited to large scale development.

The project attracted the interest of Vale (formerly Companhia Vale do Rio Doce) in 2005 which resulted in an agreement whereby Vale conducted a detailed Exploration Study of the geology, coal quality and mining potential of the Belvedere Coal Project in return for options to acquire a participating interest. On completion of the Exploration Study costing A$17 million, Vale elected to exercise its option to acquire a 51% interest in the project by paying US$45 million to each of Aquila and AMCI. Vale also has further options to acquire the remaining project interests at fair market value in the future.

Based on the Exploration Study results SRK Consulting was commissioned by the joint venture to produce an updated JORC resource statement. SRK Consulting estimated the current in-situ resource to be in excess of 3.8 billion tonnes, representing an increase of 1,211 billion tonnes on the initial resource estimate calculated in 2005.

Washpool Hard Coking Coal Project

The Washpool Coal Project (the Project), consists of a proposed open cut coal mine situated in the Bowen Basin, Central Queensland. The Project will deliver up to approximately 1.6 – 2.0 million product tonnes per annum (Mtpa) of hard coking coal for export markets.

The Project site is located 260 km west of Rockhampton, 60 km to the north east of Emerald and 24 km to the northwest of Blackwater. The Project is positioned between the Curragh Coal Mine (to the east) operated by Wesfarmers (Curragh) Ltd and Ensham Coal Mine (to the west) operated by Ensham Resources Pty Ltd. To the north of the Project area lies the Mackenzie River. The coal resource for Washpool is located within two Exploration Permits for Coal (EPC) 958 and 966, and a Mineral Development Licence application (MDLa) 403, however, the Project area is confined to a smaller proposed Mining Lease application (MLa) 80164.

The Washpool resource currently totals 138 Mt of Indicated and Inferred tonnes of high rank coal which exhibits excellent coking properties. Coal will be mined at approximately 4 Mt/a run-of-mine (ROM) coal which will produce approximately 1.6 – 2.0 Mt/a of product, until the depletion of reserves. The coal will be mined initially using truck and shovel mining methods with a view to moving to dragline in the future, with the emphasis on in pit waste dumping. There are plans to transport the coal via rail along the existing Peak Downs – Emerald – Blackwater railway system, to the new Wiggins Island Coal Export Terminal (WICET) for export coal terminal for export to overseas markets.

The Project Feasibility Study is scheduled to be completed in the first quarter 2010. On the basis of this study indicates robust project economics, the project will then proceed to Definitive (bankable) feasibility study. Subject to completion of the approval process and the Definitive feasibility study, the Project is expected to commence production in 2012.

Other Bowen Basin Projects

The Company has taken up a significant ground holding in the Bowen Basin region of Queensland and now holds 15 Exploration Permits for Coal (EPC's) and has three applications pending, covering a total area of 8,000 sq km. The EPC's were taken up as part of a broader strategy to target economic coal resources amenable to open pit mining that are close to established infrastructure. Phased programs of exploration commenced as soon as the tenements were granted and work has progressed in stages to identify and prioritise targets for drilling.

Asenjo Energy Coal Project, Botswana

The Company holds the Western Mmamabula, Dukwe and Lechana-Tshimoyapula large thermal coal projects in Botswana, collectively known as the Asenjo Energy Coal Project. In August 2007 it reached agreement with a consortium comprising Jonah Capital (BVI) Limited and Sentula Mining Limited in terms of which the consortium may earn a 50% interest in the three projects by undertaking a US$10 million exploration programme. The purpose of the programme is to complete a Pre-Feasibility Study level of assessment in respect of the development of one or more of the projects.

The exploration programme includes:

* approximately 30,000m of percussion and diamond drilling across the tenements;
* completion of JORC resource statements; and
* completion of a Pre-Feasibility Study on one or more of the project areas which contemplates the development of a large scale thermal coal mine.

Exploration activities to date comprise 14,000m of drilling on the Dukwe Project, together with coal quality test work over all of the project areas and additional drilling has recently commenced at the Western Mmamabula Project. In addition, airborne aeromagnetic survey work is currently underway over all three areas.

Each of the three project areas contains non-JORC compliant insitu coal resources in excess of 1 billion tonnes (4.1 billion tonnes in the case of the Western Mmamabula Project), providing a highly prospective target area from which to identify suitable coal resources for a potential co-development opportunity in order to provide thermal coal for the expanding power generation requirements of Southern Africa, in particular, South Africa, Botswana and Namibia.

Australian Premium Iron Joint Venture

Aquila Resources Limited commenced exploring for iron ore in the Pilbara region of Western Australia in January 2004. It was recognised early on that there are two main types of iron ore deposits mined in the Pilbara that should form the priority targets for exploration:

* Banded iron formation (BIF) hosted hematite and hematite-goethite deposits, enriched to form bedded iron deposits (BIDs); and
* Goethite-hematite channel iron deposits (CIDs) comprising detrital iron-rich material transported into Tertiary river systems and preserved in paleodrainage channels.

Target settings were generated from remote sensing studies using satellite technology to identify areas with similar spectral signatures to the known Pilbara iron ore occurrences. Applications were lodged for new tenements where the identified prospective ground was untenanted. Where targets fell on granted tenements held by parties whose commodity focus was not on iron ore, approaches were made to secure the iron ore rights through a series of farm-in and acquisition agreements.

West Pilbara Iron Ore Project

The Project is a substantial iron ore export operation proposed for the Pilbara region of Western Australia. API is currently developing Stage 1 of the Project, which is based initially on pisolite iron ore deposits located 30 km to 85 km south west of Pannawonica. There is potential for considerable growth in subsequent stages based on the prospective and extensive tenement portfolio in the west Pilbara, as well as tenements in the east Pilbara.

East Pilbara Iron Ore Project

The East Pilbara projects are located between Paraburdoo, Tom Price and Newman areas. The tenements, which cover an area of 1,800 sq km, were acquired on the basis of there being evidence in satellite imagery for iron enrichment in the Marra Mamba and Brockman Iron Formations. The areas are considered to be prospective for the occurrence of bedded iron deposits as well as locally derived channel iron deposits where palaeodrainages are preserved. The most promising results to date have been returned from the Hardey project, located 50 km west of Paraburdoo. The Hardey Bedded Iron Deposit (BID) is located approximately 50km west northwest of the township of Paraburdoo in the Pilbara and approximately 130km from the Catho Well deposit.

Thabazimbi Project, South Africa

Aquila’s Thabazimbi project area is located in the Limpopo Province of South Africa, some 200km north-west of Pretoria, and comprises three New Order prospecting rights or tenements, namely Rotterdam 547 PR (Rotterdam), Klipgat 613 PR (Klipgat) and Vlaknek 614 PR (Vlaknek); see figures below. A fourth tenement, Donkerpoort, is currently under application. This tenement covers an extension of the Penge Iron Formation from the farm Randstephne on the adjacent Aquila held Klipgat tenement.

Northern Cape Project

Aquila’s Northern Cape project area is located in the Northern Cape Province of South Africa near the town of Kathu. Kathu is approximately 520 km south-west of Johannesburg. The project is comprised of the Kathu, Japies Rust, Blackridge and Orange River tenements. The tenements are currently held in a joint venture in which Aquila holds a 74% stake.

Avontuur Manganese Project

Aquila's Avontuur project area is located in the Northern Cape Province of South Africa near the towns of Kathu and Hotazel. Kathu is approximately 520 kilometres south-west of Johannesburg and Hotazel 68 kilometres north of Kathu. The project is comprised of the Avontuur and Kathu tenements. The tenements are currently held in a joint venture in which Aquila holds a 74% stake.

Significant intersected manganese mineralisation include:

Southern Project

# 4.31m @ 38.81% Manganese
# 3.54m @ 47.52% Manganese
# 4.41m @ 49.79% Manganese

Northern Project

# 5.40m @ 56.82% Manganese
# 3.68m @ 50.81% Manganese
# 2.68m @ 47.42% Manganese and 1.86m @ 46.73% Manganese
# 2.12m @ 55.24% Manganese and 1.57m @ 59.24% Manganese

Mine For

coal, coking coal, iron ore, manganese

Location of operation(s)

Queensland, Western Australia, Botswana, South Africa

Australian Basins

Bowen

Address

Level 2 , Aquila Centre , 1 Preston Street
COMO, WA, AUSTRALIA

Phone

(08) 9423 0111

Email

Website

http://www.aquilaresources.com.au

Last Updated

26/04/2011