Orpheus Energy (OEG)

Shares / Stock Code

OEG

Stock Exchange / Sharemarket

ax

Orpheus Energy (OEG) is a company whose focus is on coal production, exploration and development of coal deposits into production in Australia and Indonesia.

Orpheus has signed a strategic alliance (Strategic Alliance) with PT Mega Coal which is a current producer of thermal coal in Indonesia and has a portfolio of mining concessions in Kalimantan. A strategic alliance, with a strong local partner in Indonesia strengthens Orpheus's corporate strategy of early low cost coal production combined with significant opportunities to acquire further Indonesian coal projects and at the same time balance the Orpheus risk profile by progressing the Australian coal and industrial minerals portfolio. Orpheus, with its experienced management, provides participation in a leading commodity, namely, coal in both the first and second largest coal exporting countries in the world, Australia and Indonesia.

Orpheus Energy Company History

Orpheus Energy Limited (OEG formerly Australian Motor Finance Group Limited AMFG) OEG was placed into Administration on 19 January 2010 and was subject to a Deed of Company Arrangement. Its subsidiary Australian Motor Finance Limited (AMFL) the original main operating arm of the AMFG Group was placed into a Receivership status in January 2009 by the Bank of Adelaide. The bank has a charge over AMFL and the receivables held in a trust managed by AMFL. Prior to entering into the motor finance industry in mid 2008, the Company was a mineral explorer and its name was Bushveld Platinum Ltd and prior to that Catalyst Platinum Limited. All subsidiaries owned at the date of entering into Administration have been sold or are
dormant with the intention of being struck off.

Kalimantan - B26 Thermal Coal Project
Orpheus has entered into a joint venture (the B26 Joint Venture) with two companies associated with the Indonesian PT Mega Coal group to earn 51% of the B26 project in Kalimantan with an existing coal deposit and preliminary mine plan.

The purpose of the B26 Joint Venture is to contribute to the mine development of a coal project known as "B26" referring to Blocks 2 and 6 south west of Balikpapan in East Kalimantan. Block 2 contains a JORC resource of 1.13Mt, with additional drilling underway with a coal exploration target of 1.3Mt to 2.0Mt. In Block 6, drilling is underway with a coal exploration target of 1.5-2.5Mt. There is also potential for coking coal in the B26 project area.

Additional coal areas are to be reviewed as part of the Strategic Alliance. It is proposed to progress the  existing advanced project to bankable feasibility status. The preliminary mine plan would see coal mined via open pit methods with no washing. Coal would be transported by road to the nearest river where it would be loaded onto barges for transfer to a coal carrier at sea. Orpheus will review all existing mine data and will re-create its own database to advance the exploration coal target. Presently overburden at B26 is being pre stripped to expose the coal to allow trial mining.

Orpheus intends to continue with mine planning studies until bankable feasibility is complete which will include road, port and river transport studies to determine a definitive Capex for the B26 project. The existing Operation Production IUP on Block 2 allows mining in parallel with these studies and would see export coal production occur during 2011. Orpheus targets up to approximately 480,000 tonnes per annum export coal production from Block 2 of the B26 project.

It is expected that the Capex and Opex for the B26 project may make lower resource volumes economic for production. The B26 coal quality data obtained from outcrop and drilling shows relatively marketable coal which is of export quality and bituminous in rank. Proximity to road and port also provide competitive operating cost capability. The current excavation work to pre strip overburden to expose the coal provides a good foundation to achieve early coal production after listing. The acquisition cost to purchase 51% of the B26 project was USD$1,500,000 which has been paid by OPL to PT Mega Coal.

A haul road exists from the mine to enable the haulage of coal from the mine to the barge port which is a distance of approximately 26km. A site for the barge port has been identified. A stockpile is planned which will feed a conveyor loading coal onto barges (up to 8,000 tonnes) down river and out to Adang Bay where coal is unloaded onto a ship for sea carriage to offtake customers.

Hodgson Vale Project
The area which makes up the Hodgson Vale Project being acquired by Orpheus from Coalworks Limited and is presently held under Exploration Permit 1145. The area is approximately 10 km south of Toowoomba in South East Queensland. The former tenement holder of the application area, Millmerran Coal Pty Ltd intersected a coal seam of about 20 metres at a depth of 40 metreswhich appears to be part of the Walloon Coal Measures.
The current target in this area of EPC 1145 is 5 to 20 Mt of export quality thermal coal. Coalworks has drilled a 5 hole drilling program to test the potential to the south of the postulated open cut area. The first 2 holes drilled in the mid eastern portion of the EPC failed to intersect coal although the third hole did intersect the Walloon coal measures with coal plies. Coalworks did intersect cumul ative coal seams of approximately 8m in the fourth hole and 6.8m in a fifth hole.

Other historical holes have thick coal intersections, as well, providing encouragement for continuous thick coal seams. Key hurdles for development will be resource establishment, coal processing tests to produce a marketable product, planning development distanced from local dwellings and gaining coal to port capability access.

The coal is a hard, perhydrous black coal having an in situ ash content of 40%+ (inherent ash up to 15%). Sulphur is typically 0.5% to 0.7%. Washing will possibly reduce ash. and sulphur to improve the product. The calorific values of the coal range from 22-24 MJ/Kg or higher which indicates it is suitable for sale as a medium grade export thermal coal.

Ashford Lime Project
Orpheus acquired the Ashford Limestone Deposit (EL 6511 (NSW)) from Coalworks Limited. The Ashford Limestone Project is stated to have an exploration target of between 20 and 40 million tonnes to a depth of 20 metres of high quality calcium carbonate which is an estimate based on two reports by Associate Professor Peter Flood of the University of New England (Ref GS 1992/203). Coalworks previously commissioned international mining consultants, SRK Consulting in 2006 regarding whether a market exists for lime products who advised that Ground Calcium Carbonate (GCC) and other lime products would command a ready market.

Orpheus plans technical studies aimed at producing a mineral process flow sheet and progressing the studies to feasibility stage upon establishing a limestone resource with special emphasis on the market for GCC and other value added limestone products. In the south of Orpheus's area previous work by another company Kallengur Lime Pty Ltd in 1989 suggests the limestone could also be used for decorative aggregate, glass manufacture and whiting manufacture.

The Ashford Limestone deposit is a high purity limestone with results of up to 56%CaO (ie 99.9% CaCO3) and accordingly has the potential to produce the highly sought industrial filler, GCC. The strong market for GCC is demonstrated by this extract from Roskill:

"The market for ground calcium carbonate (GCC) expanded from around 56Mt in 2004 to almost 72Mt in 2007, an average annual growth rate of nearly 9%. World demand for GCC is forecast to continue to grow at an average annual growth rate of 4% to 2012, to reach 87.4Mt"

Rising demand for paper pigments from the paper industry has been the main driver behind the rapid growth in GCC consumption since the early 1980s. GCC competes with kaolin and precipitated calcium carbonate (PCC), mainly as filler, but increasingly in coating applications in printing and writing paper. The market for GCC in paper coating has shown a high rate of growth because of its brightness and good performance in high-speed paper machines, which has helped GCC to take market share from kaolin.

The plastics industry is the second largest user of GCC, accounting for an estimated 14.4Mtpy of consumption in 2007, compared with 10.2Mtpy in 2004. GCC is the most commonly used filler in plastics, but other minerals such as talc and alumina trihydrate (ATH) are used in more demanding applications. The market/global trend is for finer ground material as consumers use GCC less as filler to reduce costs, but more as a process aid and functional additive. GCC is the most commonly used filler and extender mineral in emulsion and semi-gloss paints; finer grades have also been developed that can be used in gloss paints.

Wingen Bentonite Project
Orpheus has exercised an option to establish a joint venture with Plasminex to explore, develop and exploit bentonite, clays and other minerals pursuant to tenements EL 7142 and ELA 3657 near Wingen. Orpheus will target bentonite clay which has many uses including drilling mud, impermeable liners, detergents, pelletising, bonding, cat litter, foundry moulding sand etc. Preliminary exploration work has already been carried out by Plasminex to delineate drill targets and conduct surface sampling.

Four areas of interest in the EL area are targeted for exploration by Orpheus. Firstly, work done by H. de Keyser in 1971 suggests six bentonite horizons based on surface sampling. Orpheus wishes to conduct reconnaissance, data review and metallurgical testing to assess its ability to upgrade to commercial products. Secondly, Orpheus plans to drill the known bentonite horizons to delineate a bentonite resource to a sustainable quantity of material sufficient for development. Orpheus plans metallurgical testing to enable technical studies to produce a process flow sheet before progressing the studies to feasibility stage.

The objective of this program will be to establish a sufficient bentonite resource which is economically viable with special emphasis on the market for value added bentonite products. Orpheus believes the project can deliver a high quality industrial product similar to the Cressfield mine which lies close to the south west of EL7142 from a low Opex open cut operation. Typical specifications are expected to be 78 meq/ 100gm, swell volume 29 mls and moisture 19.7%-36.5% which has good potential to become a commercial product.

Previous Company Name: Australian Motor Finance Group Limited (AMFG)