Junior miner Minergy Limited said it will this month record its first commercial sales, while the ramp-up of its operations is on-track at the Botswana-based Masama Coal Project.
In a project and corporate update to the market, the BSE listed company said it will deliver coal to a client in the near future. “The company is completing the process to sign its first long-term contract, to deliver 120,000 tons of coal per annum to one regional industrial customer, which represents approximately 10% of estimated annual saleable coal,” Minergy revealed.
“Discussions are underway with a number of other interested regional industrial customers, many of whom have already tested samples of the company’s coal over the past few months and the Company is confident of signing additional customer contracts in the coming weeks.”
At present, Minergy is mining 110,000 tons per month, resulting in 70,000 – 80,000 tons of saleable coal. The saleable coal target is expected to increase to 100,000 tons per month in early 2020. Several opportunities to significantly increase production will be assessed going forward.
The company has exposed the first 340,000 tons of coal, which represents approximately 3 months’ nameplate production. In doing so, the Company has removed over 2.5m cubic metres of overburden. The Company is extremely pleased with both the timing and the progress made at the Masama Coal Project, which is will be transitioning from mine development into a mining operation at full production.
Coal Resources and Coal Reserves
A Coal Resource of 386 Mt has been defined in terms of the preliminary workings for the project and comprises Opencastable and Underground Mineable Resources in the Measured, Indicated and Inferred Resource categories as presented in the table below, which is based on an extract from the work in progress.
Opencastable Coal Reserves are currently in the process of being calculated and ROM Coal Reserves are likely to range between 55 and 65 Mt, with resultant Saleable Coal Reserves likely in the range of 30 to 40 Mt.
Potential production growth
The Masama project has a 386Mt Coal Resource. Of this, approximately 82 Mt is considered opencastable, giving a life of mine (“LOM”) of 22 years. The remaining approximately 304Mt is considered mineable by underground mining methods and could significantly extend the LOM. Prior to the opencastable Resource being exhausted, a detailed assessment of underground mining will take place. In addition, there are also plans to conduct further exploration on the remainder of the prospecting licence, which is substantial and currently totals at 352 km2.
Depending on the economics at the time, opportunities to significantly increase production include increased supply to industrial customers, export opportunities, or power generation. Increased production would require additional capex primarily to increase the capacity of washing plant and plant infrastructure, and completion of an additional box cut.
“The team is extremely proud of what has been achieved in a relatively short period of time, not only for Minergy but for the development of the coal sector in Botswana,” said Minergy CEO, Morné du Plessis. “Minergy has pioneered a process that will support the regional industrial demand for coal and in so doing, benefit the people of Botswana through job opportunities and vital coal skills development.”