coal

Dwyka has an option to acquire a 30 per cent interest in the Daguma and Bonanza Coal Projects (collectively, 'the Coal Project'), located in the Republic of the Philippines. There is a possibility of increasing the Company's interest to 100 per cent over time.

With this project, Dwyka gains a strategic foothold in a region with ready access to the expanding markets of India and China. Evidence that the Philippines may experience significant power shortages in the near future, leading to the construction of more coal-fuelled power plants in the region, adds to the attractiveness of the enterprise.

Indeed, in securing the option, Dwyka has the opportunity to emulate the success of Semirara Mining Corporation, a major Filipino coal producer capitalised at approximately US$400 million. In 2006, Semirara was responsible for around 92% of coal production in the Philippines. The coal it produces is similar in quality to that of Dwyka's Coal Project.

Daguma Agro Minerals Inc. ('DAMI') and Bonanza Energy Resources Inc. ('BERI') control the Daguma and Bonanza Project areas respectively. Subject to shareholder approval (to be sought in June 2008), Dwyka has an option to acquire 100% of the issued shares in Asian Coal Resources Limited ('ACRL') ('the ACRL Option'). In turn, ACRL and its local partner, MANA Resources Development Corporation, collectively hold options ('Project Options') which, if exercised, would enable them to acquire an initial 30% interest in the Coal Project, with the possibility of increasing that to a maximum of 100%.

The Republic of the Philippines is divided from north to south into three island groupings: Luzon, Visayas and Mindanao.

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Situated on the southern portion of Mindanao Island, about 75 kilometres east of the town of General Santos, the Coal Project comprises 10 coal blocks, each with an area of around 10 square kilometres (for a total project area of 100 square kilometres). These blocks lie within the provinces of South Cotabao and Sarangani.

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Geologically, the Coal Project lies within the Cotabato Basin, a large structure covering most of central Mindanao and bounded to the west by the Daguma uplift.

Structurally, the coal deposits are controlled within the Seven Lakes Embayment, a sub-basin on the southwestern edge of the Cotabato Basin. In this uplift area, massive weathering has exposed outcrops of the coal seams, which range in thickness from 8 to 17.5 metres.

Of the 10 blocks comprising the project area, two have been the subject of significant historical drilling (32 holes) and other work, including a completed scoping study.

Dwyka's initial exploration program, based on this work, aims to confirm the existence of 125 million to 150 million tonnes of coal with a calorific value of between 5,300 and 5,500 kilocalories per kilogram at the two blocks. The Company notes that exploration to date has not defined a JORC-compliant Mineral Resource and there is no certainty that further exploration will result in the determination of same.

However, on the basis of the scoping study - lodged with the Philippine government by the current project owners - Dwyka aims to produce a JORC-compliant Mineral Resource within two years, with a view to establishing a mine and associated infrastructure.

Recently, through a combination of drilling, pitting and trenching, the eight other blocks in the project area have also been proven as coal-bearing. Dwyka considers these blocks highly prospective, with the potential to be similar or greater in size than the two main blocks described above.

The Coal Project's proximity to the coast (just 45 kilometres inland) will facilitate both transport and export of production. Moreover, the coal occurs in flat-lying seams and thus can be easily mined by way of a truck-and-shovel operation.

Dwyka foresees an aggressive programme of development and feasibility work, including examination of various transport options, in order to progress the Coal Project as a significant mining operation. It is believed that production could begin as early as the 2009-10 financial year.

The lignitic/sub-bituminous coal in Dwyka's Coal Project is considered potentially suitable for use in power stations and for industrial purposes. A summary of the characteristics of this coal, and a comparison with the equivalent coal from Semirara, are set out below.

	Daguma coal quality as   received	Daguma coal   air-dried	Semirara coal-air dried-mid
Kcal/kg	4,270	5,390	5,300
Ash	5.59%	7.11%	7.50%
Sulphur	0.61%	0.76%	0.60%
Volatile matter	37.23%	47.13%	38.00%
Fixed carbon	30.98%	39.12%	38.50%
Total moisture	26.10%	Not applicable	24.00%
Residual moisture	Not applicable	6.64%	13.00%
Hardgrove index	Not applicable	55.81	45

The Option Agreements have given Dwyka the opportunity to acquire an interest in a near-term producing project, in a commodity currently enjoying buoyant prices, and in a region that offers advantages in relation not only to current and forecast demand for coal in that part of the world but also additional opportunities in the future.

As Semirara's success shows, a Philippines-based coal producer can develop a sizeable and sustainable business extracting and selling coal of medium calorific value to export customers, as well as local power stations and industrial users. Given the predicted constraints on power generation capacity in the near term - in the Philippines, as well as globally - demand for coal in the region is likely to increase in coming years, adding to the attractiveness of the project.

Please go to announcements for the most up-to-date information on Dwyka's coal project.