Xceed Resources (ASX: XCD) is an Australia-based company engaged in the exploration and development of coal projects in Southern Africa.
The company is developing the Moabsvelden thermal coal project in the Witbank coal field. Moabsvelden is expected to have a mine life in excess of 15 years and will produce export quality as well as domestic quality thermal coal.
Xceed Resources (ASX: XCD) is anticipating first deliveries from its Moabsvelden Thermal Coal Project in South Africa in the March quarter of 2013.
Providing upside to the project, is that Xceed has received expressions of interest to take coal at the mine gate, freeing up the project from rail and port constraints.
Ian Culbert, managing director, told Proactive Investors the written expressions of interest would be converted into offtake agreements when Xceed had pinned down its expected date of first deliveries, which he said would probably be in the first quarter of 2013.
“Between now and then we need to secure project development finance as well as obtain our regulatory permits,” he said.
“Regarding the financing issue, we will shortly be hosting a number of mining finance banks to visit the site and obtain a briefing on the Feasibility Study. From this we expect to obtain an offer of debt finance.”
Xceed is also in the process of securing equity and quasi-equity to supplement the debt element.
“These initiatives will be completed in the next six to eight months,” Culbert told Proactive Investors.
Meanwhile, permitting is also on track for Moabsvelden.
“On the permitting front, everything is progressing in accordance with the regulatory framework and we expect this to be concluded 1Q2013,” Culbert said.
Yesterday Xceed delivered the results of the recently completed Bankable Feasibility Study (BFS) for Moabsvelden, which is located within South Africa’s key coal region of Witbank.
The ungeared project net present value has come in at A$92 million (12.5%) post tax, while the internal rate of return has been estimated at 60%.
The BFS is based on a 15 year mine life producing 666,000 tonnes of export quality coal and 890,000 tonnes to supply domestic power stations annually.
The capital cost of development is $33 million based on an owner-operator model for the processing plant and contractor mining.
The BFS shows an earnings before interest, taxes, depreciation and amortisation margin of 45%.
Importantly, there is further potential to reduce the capital cost of development to about $18 million if Xceed decides to operate the coal wash plant under the terms of a Build-Own-Operate-Manage (BOOM) arrangement, which it has received a proposal for.
Xceed acquired the Moabsvelden thermal coal project because it is relatively easy to develop, and is within the Witbank /Ermelo /Highveld coalfield complex that supplies 80% of South Africa’s coal.
The project contains a Measured Resource of 63.75 million tonnes and an Indicated Resource of 2.39 million tonnes, which includes Reserves of 43.8 million tonnes.
The project is surrounded by metallurgical and thermal coal mines at Leeuwpan, Stuart Coal, Vanggatfontein, and Rietkuil, where each project outputs an average of 3 million tonnes of coal per year. New mines are under construction at Vlakvarkfontein, Kangala and Brakfontein.