ZYL Limited (ASX: ZYL) is focused on developing anthracite coal projects in South Africa, and has the potential to transition to producer in 2013.
The company has already received non-binding expressions of interest for 1.7Mt of its Kangwane product - which is targeted at the export market.
This is a seven fold increase on earlier offers and indicative of the market's confidence in the two projects to become a significant supplier of anthracite.
Anthracite is prized in South Africa and export markets because of a looming shortfall of 21.7 million tonnes by 2015.
As importantly in South Africa, the expressions of interest are from parties with access to port facilities and coal terminals within Southern Africa, providing potential export markets options.
Tellingly, the Kangwane expressions of interest received to date total 1.7 million tonnes per annum. This exceeds the initial planned saleable production from the Kangwane project of 1.2 million tonnes per annum.
The Mbila EOI’s received to date now total 2.3 million tonnes per annum (inclusive of the 600 000tpa announced on 3 February 2012) and exceed full planned saleable production for both Phase 1 and 2 of production.
Interest has also been lodged for funding of both anthracite projects.
The latest EOIs are from major international commodity traders who have agreements to procure export capacity for coal and/or anthracite at Matola Coal Terminal in Mozambique and may have similar opportunities through other South African ports.
The Kangwane project is focused on the export market and the Mbila project is initially targeting domestic supply.
Last week ZYL received a filip today with the release of a Feasibility Study that demonstrates the Mbila project is economically competitive with strong profit margins and a project Internal Rate of Return of 41%.
Capital expenditure has been outlined at a reasonable A$85 million (which includes a contingency of A$10.8 million). Mbila has the potential to produce a forecast phase one production rate of 580,000 saleable tonnes annually - which would commence around mid-2013.