At the start of June, Rey upgraded the JORC-compliant resources at the Duchess-Paradise project to total resources of 511 million tonnes of thermal coal, including 35.2Mt measured, 143.5Mt indicated and 331.5Mt inferred.

Speaking at the 5th Coaltrans Australia conference in Brisbane yesterday, managing director Kevin Wilson said the coal deposit could hold many billion tonnes of thermal coal.

On its long-term potential, he said the area could be a multi-mine basin, allow for a thin seam longwall, shallow open cut operations and underground coal gasification opportunities.

Given the lack of infrastructure, Rey’s current plan is to truck coal 180km up the Great Northern Highway to export 2Mt through Derby’s port.

But Wilson said the company was also looking to the proposed port development at Point Torment, on the coast further north of Derby.

The proposed port is in a deepwater site which will offer more capacity for exports.

Rey is targeting the growing Indian thermal coal market as well as China.

Wilson said exports from Derby would take 10 days to Chennai in India compared to 19 from Newcastle, while exports from Derby to Shanghai would take 12 days.

Gujarat NRE Minerals, an Australia-listed subsidiary of India’s Gujarat NRE Coke, has made a takeover bid for Rey which closes on September 4.

The hostile takeover offer gives Rey shareholders the choice of either A9c per share in cash or one Gujarat share for every five Rey shares held.

Prior to the bid, Gujarat already held a 16.7% interest in Rey.

Shares in Rey Resources closed down half a cent to 17.5c yesterday, while Gujarat shares were unchanged at 65c.