Coal Miner Beacon Hill Resources (LON:BHR) is to explore a new coal prospect in the Tete province of Mozambique through a joint venture.
The firm said the new licence covers 184 sq km and is located in the heart of the highly prospective coking coal basin of the Songo Area of the Tete Province in close proximity to significant existing coal projects.
Beacon Hill is to issue 60 million new shares to current licence owner Midwest Africa Limited (MAL) and will take an 80 per cent interest in the property.
Minimal exploration work has been undertaken on the prospect so far, it said, but nearby is Jindal Steel & Power’s Chingodzi Coal Project, which has an estimated resource of 724 million tonnes of coking and thermal coal.
Beacon Hill added that 100 sq km in the north-east and the east of the licence area is also covered with coal bearing Karoo sediments.
This is similar to the coal bearing Karoo sediments found in the Moatize Coal Basin where its Minas Moatize mine is situated.
Beacon Hill made its first shipment from Minas Moatize this week and says it intends to use cashflow from coal produced at that mine to fund this latest joint venture.
Justin Lewis, Beacon Hill’s chairman, said: "This licence allows Beacon Hill significantly to expand its resource base and in turn strengthen its foothold in Tete, one of the most exciting coking coal regions in the world.”
“The new licence covers a highly prospective area 70 times the size of Minas Moatize, and represents an opportunity for the group to invest in a longer term development project that will further enhance the group's value accretion potential," he added.
Shares in Beacon Hill jumped by 6 per cent to 9.7p.