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Coal find sparks land rush - Murray Lyons, Saskatchewan News Network

Published: Tuesday, May 06, 2008

SASKATOON -- When it comes to carbon-based minerals, there's a lot more sex appeal in diamonds than there is in coal, but a new, unique coal find in Saskatchewan announced recently is causing a stir among those who follow the coal industry.

And it's all because a company's exploration drilling this winter failed to find diamond-bearing kimberlite.

News of the find made by Vancouver-based Goldsource Mines Inc. caused a market flurry in its own stock, based on a series of announcements in the past week about what it calls a potential large deposit of high ranked bituminous and sub-bituminous coal.

The announcement has also sparked a staking claims rush as companies seek an adjacent land position to Goldsource, whose coal find is about 50 kilometres east of Hudson Bay not far from the Manitoba border.

Goldsource -- GSX on the TSX Venture -- first announced on April 22 that it had intercepted coal and has put out two announcements since that time, each one boosting the price of its stock. It closed Monday at $4.55, up 35 cents on the day. Prior to that, nobody was interested in GSX as the stock was trading at about 20 cents and there was a period in early April where nobody bought or sold its stock for five straight trading days.

That all changed by mid-April when the share price quadrupled and then doubled twice. While trading volume was a modest 616,000 shares Monday, as many as 2.7 million shares traded April 28 as the stock soared 65 cents in one day to close at $2.60.

Investor relations spokesperson Fred Cooper says the Goldsource find caused a land rush by other companies for positions surrounding its Hudson Bay area property to pour into the minerals branch office in Regina.

Energy and Resources spokesperson Bob Ellis confirmed that there has been a "rush" of land claims as other companies seek to get in on the coal play. He says geologists with the department are as surprised as anyone that coal could be found in that part of the province.

"We didn't have an indication that there was coal in that area," Ellis said Monday.

The most recent mineral resource map of Saskatchewan continues to show the main coal deposits in Saskatchewan to be the low-ranked lignite coal adjacent to SaskPower's generating stations in Estevan and Poplar River.

Despite coal's negative reputation as being a major contributor to greenhouse gas emissions, high BTU coal for power plants and for coking in the steel industry is in short supply and the price of coal has jumped three-fold in the past year.

Goldsource is a company that has existed for about five years. It was initially set up to look for kimberlite. It has two other land positions in Saskatchewan, including a property in the Fort a la Corne forest not far from Shore Gold's position.

The "border" land position east of Hudson Bay was more speculative in that airborne magnetic surveys showed a formation that gave a similar signature to other kimberlite formations, Cooper said.

The company started a drill program this past winter to check out whether the formation in question was indeed kimberlite. But about 80 metres below the glacial overburden, the drill holes, located 1.6 kilometres apart, both encountered coal, Cooper related.

Additional drilling below the seam of coal found the rock formation that gave off the magnetic signature, but it wasn't kimberlite. But that was okay with company officials at Goldsource.

"We're very happy with what we did find," Cooper said from Vancouver.

The company says the coal found has a calorie value ranging as high as 8,100 to 10,000 BTUs per pound with sulphur content in the low range, averaging about 1.5 per cent. Company president Scott Drever states the information on the coal seam to date suggests the potential "to establish a significant resource tonnage in a relatively short time.

"We believe that the thickness of the seam, its apparent low geologic complexity and excellent thermal characteristics will make it unique, certainly to Saskatchewan and perhaps to Canada," he stated.

© The Leader-Post (Regina) 2008

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