Junior explorer Shumba Coal Limited said it has entered into a binding Sale and Purchase Agreement with Daheng Group Botswana (Pty) Ltd for the acquisition of the Mabesekwa Prospecting Licence (PL428/2009).
The licence is located in the north eastern part of Botswana, some 60km south-west of the town of Francistown and 40km west of Tonota/Shashe. The Mabesekwa Prospecting Licence is currently valid and will be up for renewal on the 31st of December 2016.
In the period from now till then, Shumba Coal intends to complete mine Preliminary Feasibility Studies and associated Environmental Impact Assessments, spending a minimum of BWP3,200,000 (USD 340,000).
The company however revealed the deal is subject to regulatory approvals by of the relevant Authorities in Botswana including the Minister of Minerals, Energy and Water Resources approving the transfer of the prospecting rights.
“The acquisition of a very low mining cost coal deposit is an excellent outcome for Shumba and is part of our continuing strategy of investing in Botswana based energy projects to supply affordable energy domestically and into the region,” Shumba Coal Managing Director, Mashale Phumaphi said.
The estimated in-situ coal resource is 844 Mt in accordance with (Australian) JORC Code, predominately contained in one coal seam, with an average seam thicknesses >18m with a flat and consistent profile with the coal found at average depths of 50-60m, to be accessed by open strip mining.
Over 189 boreholes have been drilled and geologically and geophysically logged, with coal analysis undertaken. The JORC compliant resource statement was issued in September 2012. The report was prepared by Alan Golding who satisfies the requirements of a Competent Person as defined under the JORC Code.
Shumba said should the approvals be obtained, it will immediately issue shares to the value of US$2,000,000 to Daheng and within 18 months pay US$2,000,000 cash to Daheng. However, should the company fail to pay Daheng, it will issue further shares to the value of US$3,300,000 to the latter and final payment of US$2,000,000 cash is payable to Daheng upon commercial production of coal from Mabesekwa.