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ÑIRIHUAU BASIN COAL PROJECT

Commodity: Coal

Location:
The Ñirihuau Basin Coal Project is located in western sector of Rio Negro province (Argentinean Patagonia), some 70 km southeast of the township of San Carlos de Bariloche (fig 1). It is probably the second most important coal workings and occurrence in Argentina (after the Rio Turbio deposit in southern Patagonia). The presence of coal in the area was noted as long ago as the late 1890’s, but more detailed reports were given by a geologist (Rassmuss) in the 1920’s. During 1940 and 1950 this area was explored and worked by YCF, which was a state owned coal mining company (Pico Quemado coal mine).

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Rio Negro province map and the location of the Ñirihuau Basin coal project.

The general area is typical “northern Patagonia” character with limited low vegetation and altitudes of around 1300 m. Access is reasonable with good gravel roads and farm tracks.
Some 40 km to the south-east there is the Ñorquinco railway station and some 65 km to the north is the Ñirihuau railway station. Both these railways connect to the national system and near the port of San Antonio Este (on the Atlantic coast) a distance of some 600 km. This port is geared to the export of fruit, other agricultural produce, general cargo (with some large ships) and also a fishing fleet. It is operated by a corporation (Patagonia Norte) and they have Trendix Mining - www.trendixmining.com.ar Página 3 plenty of spare capacity as most of their cargo is seasonal. The main wharf is 200 m long so it can take reasonable sized ships.
Trendix Mining owns five large ''cateos'' (mining rights or exploration permits) in Ñirihuau basin, with a total of 27,000 hectares (fig 2). The tenements covers known areas of outcropping and deeper coal seams including Pico Quemado mine area.

Location of Trendix Mining Exploration permits

Trendix Mining has submitted the environmental report to the provincial authorities, and is waiting its approval. The study was conducted by Vector -Ausenco. They have also finished theSocial Baseline Study, conducted by Lic. Carlos Cuburu, and they are now working on the completion of the permissions and agreements with surface owners. They are also working with the provincial authorities to close agreements with the aboriginal communities near the project area. This work is at an advanced stage and is expected to be completed soon. There is a very good acceptance of the project by the provincial authorities, which consider it strategic for the province.

Regional Geology
The Ñirihuau basin is developed between 41°-43° S, in the Northern Patagonian Andes, Argentina, with a north-south trend along 200 km between the localities of Bariloche and Esquel. The coal seams are within Ñirihuau Formation, which are Miocene volcaniclastic continental deposits.

Local Geology
The zone where the most important coal seams have been detected extends throughout approximately 22 km in sense NNW-SSE. Nevertheless, coal seams of smaller importance have been identified throughout all the Ñirihuau basin, therefore, the potential zone to be explored is the totality of the basin.

There are three main zones with known coal outcrops: Pico Quemado Area, Chenqueniyeu Area, and Las Bayas Area. The first two of them have the greatest potential and they are where Trendix Mining concentrated most of the exploratory work.

The zone of Pico Quemado is where the carbonaceous levels are better exposed, and therefore, where the greater effort was concentrated in the past. This sub-basin includes an area of approximately 140 hectares, and the sediments that form it are folded forming a great synclinal, whose axis is dipping towards the SSE. Four coal seams have been detected, grouped in two layers. The lower layer (seams 1 and 2) displays a net coal thickness of approximately 3.13 meters, whereas the upper layer net thickness (seams 3 and 4) is 2.30 meters.

Towards the center of the basin the thicknesses and the quality of the coal tend to increase, whereas in the edges, the carbonaceous levels are more contaminated with clays. The seams of the lower layer were where the works were more concentrated, mainly because its thickness and quality of the coal.

The deepest part of the lower layer (the axis of the syncline) is about 130 meters deep, while the deepest area of the Superior Layer is only 51 meters. During 1940 and 1950 YCF made approximately 3,800 meters of underground workings, and more than 1,000 meters of drillings.

The Chenqueniyeu Zone is located approximately 6 km north of Pico Quemado. It has a great potential and surely will exceed the reserves identified in Pico Quemado mine. Trendix Mining has identified six carbonaceous layers of up to 6 kilometers, and thickness up to 12 meters (coal seams + carbonaceous shale). In some outcrops net coal thickness within these layers reach up to 5 meters. The known coal outcrops covers an area of 2,600 hectares and the future exploration work surely will extend this zone. The carbonaceous layers are part of the western flank of a syncline, and have a dip eastward ranging between 15° and 30°. The behavior of these carbonaceous layers in depth is unknown, but theoretically into the deeper parts of the basin these should increase thickness and improve quality. This sector has been very little explored and the discovery of these thick carbonaceous layers outcrops opens a promising outlook in this sector of Nirihuau Basin.

Yacimientos Carboníferos Fiscales (YCF) determined a reserve of approximately 5 million tons for the Pico Quemado basin. However an Australian consultant brought by Excarb PTY Ltd (Allan Fidock) consider that Pico Quemado basin may contain an insitu resource of up to 20 million tons. According to this consultant the Chenqueniyeu basin could potentially contains up to a further 50M tons.

In 2005 the CMM Global Overview (Methane to Markets Coal Sub-Committee) estimated the available coal “resources in the general area as 81Mt. In terms of coal quality, it is a bituminous coal of high volatility (American classification system) and owns a good cooking aptitude. Recently analysis of samples are encouraging particularly when considering these samples were taken from exposed seam outcrops which will be heavily weathered and oxidized. In addition, historical data from the PQ mine also suggests potential ‘coking’ properties of the coal.

Some of the recently analysis throws the following results:



PQ-1 and PQ-2 are from Pico Quemado basin, and CH-1 is from Chenqueniyeu basin.