For personal use only - Australian Securities Exchange fileCOAL FE RESOURCES LIMITED QUARTERLY...

COAL FE RESOURCES LIMITED

QUARTERLY REPORT

For the period ended

31 December 2007

Highlights

• Completed geological due diligence on proposed

acquisition of PT Nusantara Thermal Coal (NTC).

• Ongoing drilling program for the Abadi Project with

six (6) drillhole results yielding encouraging results.

• Undertaking a feasibility study to assess the social and

economic issues of Kilisuci Project.

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INTRODUCTION

The December Quarter saw the Company in the midst of completing its surveying

activities on its projects and completing its geological due diligence exercise on its

proposed acquisition of 60% of NTC from PT Bungo Raya Nusantara (“BRN”).

Major activities during the quarter were as follows:

o Geological due diligence fieldwork on NTC acquisition has been completed

and final reports were submitted to CES end January 2008.

o Ongoing drilling program for the Abadi Project with six (6) drillhole results

yielding encouraging results.

o Undertaking a feasibility study to assess the social and economic issues of

Kilisuci Project.

Overall, activity for the quarter was dominated by the commencement of the drilling

program for the Abadi project and completion of the geological due diligence exercise

on the NTC acquisition.

UPDATE ON NTC ACQUISITION

As announced on 21 June 2007, the Company is proposing to acquire a 60% equity

interest in NTC from Bungo Raya Nusantara (“BRN”), which owns a 3rd

generation

Coal Contract of Work (“CCOW”) concession carrying the right to mine an area of

2,832 hectares for a period of 30 years commencing on 27 March 2006 in Muara

Bungo Regency, Jambi Province, Indonesia.

CES has appointed John T Boyd to undertake a JORC compliant review and mine

planning as part of its due diligence exercise for the proposed acquisition.

Among others, the findings of John T Boyd on the resource and reserves of the project

under JORC calculations are as follows:

a) The total resource is 36.950 million metric tonnes, with 31.7 million classified

as measured resource and 5.968 million classified as indicated resource; and

b) The total recoverable coal reserve is 24.038 million metric tonnes.

The SSA expired on 21 December 2007 and CES is currently in negotiation with

BRN on the extension of the SSA.

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PROJECT REVIEW

PANCARAN ABADI PROJECT

The Pancaran Abadi (“Abadi”) Project is located in the district of Muara Badak and

Anggana, Sub Province Kutai Kartanegara, in the Province of East Kalimantan. The

area of the concession is 1,017 ha. It takes about one hour to reach the concession area

from the town of Samarinda by vehicle.

The geology of the survey area is primarily covered by 2 coal formations, the

Balikpapan Formation and Pulau Balang Formation. The seam found within the

Balikpapan Formation is mainly on the western part of the survey area with a reported

seam thickness of approximately 1.8 metres. The seam is striking south westerly and

dips between 52º to vertical. Thirty percent of the survey area is underlain by the

Kampung Baru Formation which is found irregularly above the Balikpapan

Formation.

The Kampung Baru coal formation is less well developed, central to and west of the

investigation area, and has a strike of almost north to south with a steep dip.

In general, the coal outcrop found has two directional down dips, that is, towards the

north west and south east. This is interpreted from the position of the investigation

area; it is a synclinal fold within the Balikpapan Formation. From the data collected it

is possible that the thickness of the coal seam will increase and boring activities

should be undertaken in the survey area.

The results from the general survey conducted based on outcrops and test pits show

that there are 10 seams of coal.

Activities during the December Quarter

CES has commenced its exploration the Abadi project.

Ravensgate has proposed drilling program covers a prospective area of 300 Hectares

(Ha) located at the south western section of the concession, with 21 drilling locations

to the depth of 75 to 100 metres. The selected 300 Ha is on the Balikpapan formation.

The map of the proposed drill hole locations is as follows:

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Drilling commenced in November 2007 and the program consists of drilling 21

drillholes (figure 1). These drillholes are on two lines approximately paralleling the

strike of the coal seams at a drillhole spacing of about 200m and line spacing of 400-

800 metres. The Company has obtained results for the first six drillholes and detailed

geological mapping is currently underway. Coal quality data on the coal seams drilled

to date are awaited.

Of the eight coal seams identified in the program, four (named seam A,B,C,D in

ascending order) occur in the southwestern corner of the concession in a sub-area

labelled “Block 300”, of area 300ha. Block 300 was identified as the main target area

for future exploration and drilling, because the coal seams are thicker here and the

land use situation more favourable. Seam orientation suggests the presence of a

broad, NE-plunging, anticline.

Table 1 summarises the results from the initial drilling. Of particular importance is

the recording of much greater than expected thicknesses of coal in the C and D seams

in the first three holes drilled on Line 1, respectively 6.35 - 7.71 m and 4.39 - 4.50m.

Exploration potential is greatly enhanced by these initial results. Confidence in seam

correlation on Line 1, with boreholes spaced about 200m apart, is high. The first

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three holes on Line 2 have returned mixed results which do not allow ready

correlation of seams between drillholes, nor between drillholes and outcrop.

However, two (of three) seams intersected in drillhole BH-12 are reasonably thick, at

1.91m and 2.00m.

Table 1: Drilling Summary, Abadi Coal KP Block 300

Drillhole No. Total

Depth

(m)

Coal

Intersections

(m)

Seam

Thickness (m)

Seam

Designation

(as Mapped)

BH-01 92.5 3.50-7.90 4.4 D

29.70-36.86 7.17 C

51.94-53.45 1.51 B?

79.0-80.59 1.59 A?

BH-02 75.0 2.88-7.27 4.39 D

30.95-37.83 6.88 C

53.98-55.53 1.55 B?

BH-03 97.5 9.6-14.1 4.50 D

39.85-46.20 6.35 C

64.50-65.90 1.40 B?

90.33-91.83 1.50 A?

BH-11 29.50 21.31-22.82 1.51 ?

BH-12 76.0 33.51-34.78 1.27 ?

49.59-51.50 1.91 ?

65.65-67.65 2.00 ?

BH-13 35.5 - - -

The very encouraging thickness of the C and D seams justifies further drilling. If

similar results are obtained from drillholes yet to be drilled, continuity of the thick C

and D seams along strike will be confirmed to a high level of confidence. Erratic

results on Line 2 to date indicate that much closer drillhole spacing might be required

to demonstrate continuity of the thin, lower seams.

From these initial results, exploration potential is greatly enhanced. The drilling

program is still in progress and results should be available in February.

KILISUCI PARAMITA PROJECT

The Kilisuci Paramita project has an exploitation licence over 663 hectares of mining

land and an exploration licence over 1,337 hectares adjoining the land. Preliminary

surveying indicates that the coals in the Bengkulu area of South Sumatra will have an

average calorific value of 5,325 Kcal/kg. The Kilisuci Project is geographically

favourable and is located near existing road, rail and port infrastructure. The

Company's targeted objective is to prove up an open cut mineable deposit at a waste

to coal strip ratio of 5:1 or better.

The Regency of Bengkulu has on 24 October 2007 requested CES to prepare a

Feasibility Study on the proposed mine site addressing in particular the environmental

impact and new social issues of the surrounding areas.

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Part of the current access 5.7 km road leading up to the mine has attracted new

villagers whom have built houses alongside the access road. The start of the access

road joins a new road built by the local government and has in fact became the main

road used by some 450 people living in the area.


A meeting was held with the Regency of Bengkulu on the 12 November 2007, and he

has agreed to give a work permit to work on the concession provided the social and

environmental impact is addressed.

PROJECT REVIEW

PALAPA PROJECT

The Palapa Coal project is located upon the western margin of the island of Sulawesi.

The regional geology is strongly reminiscent of Kalimantan with moderate coal

production coming from the south western corner of the island.

The project is located within the administrative boundary of the Banti Village,

Kecamatan Baraka, Kabupaten Enrekang, South Sulawesi Province and can be reach

by two wheel or four wheel drive. Ujungpandang city is approximately 300

kilometres from the project area.

Within the project area there are two coal seams considered of economic importance.

The No. 1 seam is very thin, and is very variable. It is described as being between 10-

15 cm with intercalated siltstone and shales. The second seam is also variable and has

been recorded as having a thickness of up to 1.2 metres, but appears to have no

parting.

A geological team has conducted a preliminary survey and has identified “resources”

that comply with the Indonesian Standard for reporting coal resources.


No work was carried out at the 100 Ha Palapa Project during the period. This is due to

outstanding obligations under the license that are to be fulfilled by the owners of CV

Palapa. The proposed mapping and geological study is pending the fulfillment of the

obligations by the owners of the tenement to the Mining and Energy office of the

regional government of Enrekang regency.

The 100 Ha project has been issued an exploitation license and as such the owners

would like to see the advancement of that area.

Coal FE is in negotiation with the vendors to allow Coal FE to explore another

concession that has been granted to the owners whilst the owners settle its outstanding

obligations stated under the license.

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EVENT SUBSEQUENT TO THE DECEMBER QUARTER

The Board has resolved not to continue with exploration activities on the Kilisuci

project.

The social and environmental report has been completed and summarises that the

recent settlement on areas surrounding the main access road to the concession area

means that an alternative access road needs to be built.

The cost of this exercise has had a material effect on the projected returns from the

project and after careful consideration and review the Board does not consider it to be

in the best interest of shareholders to proceed.

In return, the Company (through its subsidiary, PT Techventure Indocoal) has on 31

January 2008 entered into a Cooperation Agreement on a joint venture (JV) basis, for

a 70% interest in four (4) Indonesian companies, which currently hold exploration

licenses for iron ore concessions in Central and West Sumatra, Indonesia, following

which, the Company has released its entire shareholding of Lambang Bitara Sdn Bhd

(which holds the rights to the Kilisuci Project) to its previous owners.

Details of the iron ore concessions are as follows:

Project Location JV Partner / Manager

Area Hec

Target Type / Comments

Andalas Mangani Perkasa

Kecamatan Rao PT Andalas Mangani Perkasa

5,116 Bedded Iron Deposit

Andalas Platina Orienta

Kecamatan Lubok Sikaping

PT Andalas Platina Orienta


Andalas Basindo Natura

Kecamatan Rao, Rao Selatan and Padang Gelugur

PT Andalas Basindo Natura


Andalas Alam Nasindo

Kecamatan Lubok Sikaping

PT Andalas Alam Nasindo


TOTAL 12,558

The concession areas can be reached by daily flight from Jakarta to Padang (1 hour

and 30 minutes). From Padang the journey continues by car (four hours drive) through

the well-paved Trans-Sumatera highway to a village called Air Manggis (about 10

minutes by car from Lubuk Sikaping, capital city of Pasaman regency). From Air

Manggis Village another one hour walk to Sariak Laweh Hill with moderate to steep

slope.

The general survey done on these concessions shows iron ore presence is indicated by

magnetite content of rock boulders along slope hill, foot hill and creeks. Boulders

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comprise of volcanic, sedimentary metasediment and lateritic soil in some places. The

primary iron ore were buried or covered by local subsidence. Assays indicated FE

values of economic interest.

The general survey involved the evaluation of the concessions for bedded iron deposit

(BID). The Company is planning further geological mapping, rock sampling and

trenching as well as an aeromagnetic and radiometric survey over the tenements,

purchasing satellite imagery, and rock chip sampling. These exploration activities will

commence beginning March 2008.

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Appendix 5B

Mining exploration entity quarterly report

+ See chapter 19 for defined terms. 30/9/2001 Appendix 5B Page 1

Rule 5.3

Appendix 5B

Mining exploration entity quarterly report Introduced 1/7/96. Origin: Appendix 8. Amended 1/7/97, 1/7/98, 30/9/2001.

Name of entity

COAL FE RESOURCES LIMITED

ABN Quarter ended (“current quarter”)

121 969 819 31st December 2007

Consolidated statement of cash flows

Cash flows related to operating activities

Current quarter $A’000

Year to date(6.months) $A’000

1.1 Receipts from product sales and related debtors

- -

1.2 Payments for (a) exploration and evaluation (b) development (c) production (d) administration

(168) - -

(443)

(193) - -

(826) 1.3 Dividends received - - 1.4 Interest and other items of a similar nature

received

17

50 1.5 Interest and other costs of finance paid - - 1.6 Income taxes paid - - 1.7 Other (provide details if material) - -

Net Operating Cash Flows

(594)

(969)

Cash flows related to investing activities

1.8 Payment for purchases of: (a)prospects (b)equity investments (c) other fixed assets

- - -

- -

(3) 1.9 Proceeds from sale of: (a)prospects

(b)equity investments (c)other fixed assets

- - -

- - -

1.10 Loans to other entities - - 1.11 Loans repaid by other entities - - 1.12 Other –advances to BRN

(372) (1,056)

Net investing cash flows

(372)

(1,059)

1.13 Total operating and investing cash flows (carried forward)

(966)

(2,028)

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Appendix 5B


+ See chapter 19 for defined terms. Appendix 5B Page 2 30/9/2001

1.13 Total operating and investing cash flows

(brought forward)

(966)

(2,028)

Cash flows related to financing activities

1.14 Proceeds from issues of shares, options, etc. - - 1.15 Proceeds from sale of forfeited shares - - 1.16 Proceeds from share option reserve 87 359 1.17 Repayment of borrowings - - 1.18 Dividends paid - - 1.19 Other - -

Net financing cash flows

87

359

Net increase (decrease) in cash held

(879)

(1,669)

1.20 Cash at beginning of quarter/year to date 2,061 2,851 1.21 Exchange rate adjustments to item 1.20 - -

1.22 Cash at end of quarter 1,182 1,182

Payments to directors of the entity and associates of the directors

Payments to related entities of the entity and associates of the related entities Current quarter

$A'000

1.23

Aggregate amount of payments to the parties included in item 1.2

80

1.24

Aggregate amount of loans to the parties included in item 1.10

-

1.25

Explanation necessary for an understanding of the transactions

Includes fees for all directors during the quarter

Non-cash financing and investing activities

2.1 Details of financing and investing transactions which have had a material effect on consolidated assets and liabilities but did not involve cash flows

NIL

2.2 Details of outlays made by other entities to establish or increase their share in projects in which the

reporting entity has an interest

NIL

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Appendix 5B



Financing facilities available Add notes as necessary for an understanding of the position.

Amount available $A’000

Amount used $A’000

3.1 Loan facilities

- -

3.2 Credit standby arrangements

- -

Estimated cash outflows for next quarter $A’000

4.1 Exploration and evaluation

300

4.2 Development

-

Total

300

Reconciliation of cash

Reconciliation of cash at the end of the quarter (as shown in the consolidated statement of cash flows) to the related items in the accounts is as follows.

Current quarter $A’000

Previous quarter $A’000

5.1 Cash on hand and at bank 1,182 2,061

5.2 Deposits at call - -

5.3 Bank overdraft - -

5.4 Other (provide details) - -

Total: cash at end of quarter (item 1.22)

1,182 2,061

Changes in interests in mining tenements Tenement

reference Nature of interest (note (2))

Interest at beginning of quarter

Interest at end of quarter

6.1 Interests in mining tenements relinquished, reduced or lapsed

NIL

6.2 Interests in mining tenements acquired or increased

NIL

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Appendix 5B


+ See chapter 19 for defined terms. Appendix 5B Page 4 30/9/2001

Issued and quoted securities at end of current quarter Description includes rate of interest and any redemption or conversion rights together with prices and dates.

Total number Number quoted Issue price per security (see note 3) (cents)

Amount paid up per security (see note 3) (cents)

7.1 Preference +securities (description)

7.2 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs, redemptions

7.3 +Ordinary

securities

71,734,253 23,824,253

7.4 Changes during quarter (a) Increases through issues (b) Decreases through returns of capital, buy-backs

7.5 +Convertible

debt securities

(description)

7.6 Changes during quarter (a) Increases through issues (b) Decreases through securities matured, converted

7.7 Options (description and

conversion

factor)

8,500,000 35,867,126

Nil 35,867,126

Exercise price

20 cents

20 cents

Expiry date

31/12/2009

31/12/2009

7.8 Issued during quarter

8,784,550 8,784,550 20 cents 31/12/2009

7.9 Exercised during quarter

7.10 Expired during quarter

7.11 Debentures (totals only)

7.12 Unsecured

notes (totals

only)

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Appendix 5B



Compliance statement 1 This statement has been prepared under accounting policies which comply with

accounting standards as defined in the Corporations Act or other standards acceptable to ASX (see note 4).

2 This statement does give a true and fair view of the matters disclosed.

Sign here: ............................................................ Date: ............................

(Company Secretary) Print name: Ian Macpherson

Notes 1 The quarterly report provides a basis for informing the market how the entity’s

activities have been financed for the past quarter and the effect on its cash position. An entity wanting to disclose additional information is encouraged to do so, in a note or notes attached to this report.

2 The “Nature of interest” (items 6.1 and 6.2) includes options in respect of interests in

mining tenements acquired, exercised or lapsed during the reporting period. If the entity is involved in a joint venture agreement and there are conditions precedent which will change its percentage interest in a mining tenement, it should disclose the change of percentage interest and conditions precedent in the list required for items 6.1 and 6.2.

3 Issued and quoted securities The issue price and amount paid up is not required in items 7.1 and 7.3 for fully paid securities.

4 The definitions in, and provisions of, AASB 1022: Accounting for Extractive

Industries and AASB 1026: Statement of Cash Flows apply to this report.

5 Accounting Standards ASX will accept, for example, the use of International Accounting Standards for foreign entities. If the standards used do not address a topic, the Australian standard on that topic (if any) must be complied with.

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