The area of interest: Indus East coalfield, KhoreWah, Sindh Province

The area covered by the Exploration Licence is in the Indus East coalfield, situated to the east of the River Indus, 140 km east-northeast of Karachi and 66 km south of Hyderabad in Sindh Province, southern Pakistan.

Sindh Koela Limited intends to establish one or more mine-mouth power plants with an aggregate capacity of 150 MW that could absorb the envisaged production of 750,000 to 1 million tonnes per annum.

It is planned that drilling will recommence at the Indus East licence in the first quarter of 2009, and a drilling programme is in the process of being mapped out. Three boreholes have so far been drilled out of the 12 boreholes planned in the licence area. The drilling was carried out by Deep Rock Drilling (Pvt) Ltd. and the geophysical logging was performed by Geoscience Associates. Up to 300 meters depth drilling was carried out in each of the boreholes of which 100 meters of non-core drilled depth and the rest core drilled up to the final depth. The cumulative lignite thickness encountered ranged between 2.28 meters to 4.62 meters in two of the boreholes. Two boreholes were geophysically logged using spontaneous potential (SP) and single point resistance (SPR), natural gamma and gamma-gamma density. The log suite was restricted as logging could only take place in the cased part of the boreholes; the surrounding sediments were not self supporting. The deposit is deep and can only be mined by underground methods. Coal samples were also taken and analysed by PCSIR in Karachi. Due to the acquisition of the exploration licence for Block VI, Thar Coalfield, the drilling activities were moved to Thar but with the intention of returning to Indus East to complete the original exploration programme.

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The area of interest: Block VI - Thar Coalfield, Sindh Province

The Thar Coalfield is located 380 kilometres from Karachi, and covers a total area of 9,100 square kilometers, with a total lignite coal resource in excess of 175 billion tonnes. The coalfield is in close proximity to good infrastructure, with ongoing development of a road and power network in the region. 

The China North East Geological Survey Bureau ("CNGB") has drilled 35 boreholes at Block VI, totalling 9,852 metres, of which 5,986 metres has been cored. From the drilling, 273 lignite samples have been analysed for quality. The drilling has indicated that Block VI is likely to host a resource in excess of 700 million tones of lignite coal, focused on a seam with a thickness of between 16-30 meters at a depth of less than 150 metres. The quality of the lignite coal gives a heating value of 3,250 kcal/kg, with a high moisture and low ash and sulphur content. The depth of the coal seam makes Block VI amenable to opencast mining.   

Oracle Coalfields intends to establish an integrated project by entering a joint-venture agreement with an internationally reputable coal company and power company where the coal mine would be able to produce 1.5 million tonnes of coal per annum for a 300MW coal-fired mine-mouth power plant, which could be increased to 1100MW over time.

A seven borehole drilling programme was undertaken by us to validate all historical drilling results of CNGB, and enabled our UK-based independent coal consultants, Dargo Associates Ltd, to define a 1.423 billion measured JORC resource and a proved JORC reserve of 371 million tonnes across the prospective mine area at Block VI. In February-April 2008, a series of seven boreholes were drilled to depths of 200-240m, four of which were openholed to 100m, the other three being fully cored. The drilling was carried out by Deep Rock Drilling (Pvt) Ltd. of Karachi and the geophysical logging was performed by Geoscience Associates of Lahore. These boreholes were logged using calliper, density, resistivity and radioactivity sondes. The results of the drilling programme have confirmed the presence of the main lignite seam of 2-7m thickness, with a total lignite thickness in the seven boreholes of 20-30 meters. The overburden thickness and lignite thickness confirm the findings of the CNGB drilling. These results validate the CNGB borehole data and can now be used together with this recent drilling by us to enable a lignite resource/reserve assessment to be made. The mining area at our licensed block at Thar is amenable to opencast mining.

As discussed previously, the coal at the Block VI licence is of a lignite quality, ensuring that it is most suited to combustion in power generation. Further coal tests were carried out by TES Bretby Ltd in the UK, and the Fuel Research Centre, part of Pakistan Council of Scientific and Industrial Research (PCSIR), Karachi, which confirmed the coal quality is suitable for power generation and industry, especially for the cement sector. Rock samples were tested by Strata Surveys Ltd of the UK. It is intended that we will undertake an integrated coal mine and power plant project, giving due consideration to the benefits that a partner on the power plant side could bring to the project.

Since announcing the JORC classifications for Block VI in May 2008 we have been working on the strategy to take the licence forward toward production. Accordingly, we will now be working towards the completion of a Bankable Feasibility Study (“BFS”), the work for which is planned to start in the fourth Quarter of 2008. Work for the BFS will commence with subcrop drilling, followed by hydrogeology and geotechnical and geophysical reports and mine design. An independent Environmental Impact Assessment will also be commissioned complying with World Bank guidelines and Equator Principals and power plant study. We look forward to keeping investors regularly updated on the progress of the BFS.