Shumba Energy Ltd said it has signed an option to acquire 75% of the Morupule South project from Hodges Resources. The Morupule South Coal Project is located within the central eastern district of Botswana, directly to the south of the Morupule Colliery.
The project has a resource of 2.45 billion tons of JORC compliant resources of which 380 million tons are in the measured and indicated categories. The Morupule Main seam represents 83% of the resources. 1.2 billion tons are amenable to open cut mining with initial waste to coal strip ratios of under 2 to 1.
Study results confirm robust economics across all Morupule South development scenarios. Wood Mackenzie benchmarked Morupule South’s mining costs and coal quality against other southern African domestic mines and the project is expected to be one of the lowest cost in the region.
Shumba Energy’s Managing Director, Mashale Phumaphi said The Morupule South acquisition elevates the company to be able to take advantage of the domestic and regional industrial market.
“The project has 1.2 billion tons of high grade open cast mineable coal, is located 5 kilometers from an operating rail siding and can be brought into production within a very short timeframe. These factors set the Morupule South project ahead of other coal development projects in Botswana.”
The terms of acquisition (which are subject to due diligence and Shumba Energy securing all required regulatory approvals) are that an immediate cash payment of USD 1.4m be paid to Hodges Resources and a further payment of USD1m due one year after commercial production.
The above acquisition is a significant transaction according to the DEM Rules.
Shumba Energy is an energy development company based in Botswana and listed on the Botswana Stock Exchange and the Stock Exchange of Mauritius. The company has in recent years progressed from an exploration company to a development company and sits on over 2 billion tons of thermal coal.
As a major industry player, Shumba Energy’s mission is to satisfy the growing energy demand in the SADC region. For Shumba “Powering the Future” means addressing chronic power shortages head-on and supplying energy to affected southern African countries in a sustainable and cost-effective manner. Established in 2011, Shumba now owns a significant portion of advanced energy projects in Botswana and is uniquely positioned with its strategy to develop energy projects that are unaffected by the volatility of global coal prices.