African Energy Resources (ASX: AFR) is about to start negotiations with Botswana to establish an economic rail tariff for the transport of coal from its Sese Thermal Coal Project in the country to Maputo in Mozambique.
The company had last month completed a milestone trial rail delivery of 25 tonnes of coal, demonstrating that the transport of Sese coal via rail to the east coast of Africa is possible using existing infrastructure.
Besides the talks with Botswana’s Ministry of Transport and Communications and Botswana Railways, which will include discussion on improving efficiency on the rail network, African Energy has also engaged specialist rail and port consultants to evaluate options to increase the capacity on the existing infrastructure.
As part of the process, the company has made a written submission to Grindrod, operators of the Matola Coal Terminal in Maputo, seeking an allocation for coal exports under their terminal expansion plan.
Meanwhile, members of African Energy’s executive management team have embarked on a roadshow through India and China to promote the Sese project to potential strategic development partners.
The Botswana Ministry of Minerals, Energy and Water Affairs (MMEWR) has also started assessing the first of its coal prospecting licence applications, Foley West.
This covers the area immediately to the north and south of the Sese project.
A pre-feasibility study for the project is expected to be completed by the end of June this year while a bankable feasibility study remains on track for delivery by the end of 2012, along with mining licence approvals and financing negotiations. The next step will then be the commencement of coal sales from stage one in mid-2013.
The defining factor for Sese is that the entire deposit is amenable to open-cut strip mining, with low risk and low costs, and mining blocks are around 500 metres by 200 metres.
The bankable feasibility study is evaluating a mining operation of up to 5 million tonnes per annum of coal, with the option for an associated mine‐mouth power station of up to 600 megawatts.
The Sese Coal Project hosts over 2.5 billion tonnes of coal at the project in the Indicated category, after more than 95% of the in-situ resource was classified.
Part of the resource is now targeted to be moved into the higher confidence Measured category in the June 2012 quarter, which will be from Blocks B and C.
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