African Energy Resources (ASX: AFR) has delivered an encouraging Prefeasibility Study for an underground coal mine at Mmamabula West, based on a 200Mt portion of the A-Seam.
Frazer Tabeart, managing director, told Proactive Investors today that it's the first time a modern PFS (ie within the last 5-10 years) has been applied to a good quality coal project in Botswana.
"It shows that there is the potential for an export quality product (both for AFR and the broader Botswana coal sector), and that ROM and mine-gate costs can be very competitive.
"This bodes very well for Botswana (and AFR) when there is a sustained recovery in coal prices.
"Whilst we are a long way from the coast, the existing rail and port facilities are more than adequate to get a good business (2-3Mt of annual sales) underway, and they will improve with time. The rail tariffs are also starting to become competitive.
"It won't take much more of a fall in rail tariffs, or increase in coal price to make this project sustainable and profitable."
The study evaluated a 4.4Mtpa ROM operation producing up to 3Mtpa of 6,200kcal/kg (26MJ/kg air dried basis), low ash, low sulphur, export quality thermal coal over a 20-year mine life.
The operating cost estimates an average ROM cost of $17/t and an average product cost of $25/t at the mine gate.
Transport and loading costs add a further $8/t to load the coal into a train at the siding.
The initial capital cost estimate of U$113M for an owner operated mine and coal handling and processing plant.
There remains the room for reductions in capital cost and operating cost through optimisation of mining fleet, continuous miner performance and pillar extraction.
African Energy has also made a formal request for a further two‐year extension to the prospecting licence, submitted in late March.
Following on from the PFS, the near-term key catalysts for African Energy include:
- Resource update at Sese;
- Mining Licence Application for the first 300MW power project at Sese; and
- Government of Botswana formally announcing the final biding stage of the Botswana 300MW power tender.
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