[South Africa] Coal of Africa granted Mining Right for its Makhado project
The mining right was granted by the Department of Mineral Resources, which also granted the Company Section 11 approval, transferring the right from Coal of Africa to its wholly owned subsidiary Boaboab Mining and Exploration (Pty) Limited, which will be the project development company.
Coal of Africa completed a Class II Definitive Feasibility Study on the Makhado project during 2013 and anticipates developing the colliery to produce 2.3 million tonnes per annum of hard coking coal and an additional 3.2 million tonnes per annum of thermal coal over a 16 year life of mine.
The Company’s tests confirmed that the coal can be successfully beneficiated to process high strength coke for the steel manufacturing industry.
Following the granting of the Section 11 approval, the Makhado Colliery Community Development Trust, representing seven local communities living in the area of the project, will receive a 20% interest in Baobab Mining and Exploration.
An additional 6% interest in Baobab Mining and Exploration has been obtained by Yoright Investments (Pty) Limited.
The Trust and Yoright Investments will have two years to raise enough funds to acquire interests in Baobab Mining and Exploration, with the final amount payable subject to due diligence which will be negotiated with the Company.
The finalisation of the acquisition transactions will result in the Trust owning 20%, Yoright 6% and Coal of Africa 74% of Baobab Mining and Exploration.
The Company has proposed discussions with potential customers following the granting of the New Order Mining Right, which is a vital step in the process to secure off take agreements for the coal products.
The granting of the New Order Mining Right is also an important process towards sourcing the funding needed to develop the Makhado Project, where construction is expected to begin in H1 CY2016.
The Company expects construction to take up to 26 months with an additional four month ramp-up phase, by which time the project will produce 5.5 million tonnes per annum of saleable product.
Coal of Africa Chief Executive Officer, David Brown, commented, "The granting of the mining right is a significant milestone for Coal of Africa as it allows the Company to proceed towards developing Makhado, its flagship project. It is an important vote of confidence in the economic potential of the Project, not only for the region, but also for the Limpopo province. As soon as development starts at Makhado a meaningful contribution will be made to the growth and development goals of the province, improving the socio-economic environment of the communities in the area of operation. Coal of Africa looks forward to a successful working relationship with its partners in the area. Makhado’s capacity to produce hard coking and thermal coal alongside its close proximity to underutilised rail infrastructure ensures its role as a potential domestic and/or export supplier. The level of production from the Project has the potential to stimulate domestic industrialisation once it reaches full capacity. Coal of Africa awaits the approval of the Integrated Water Use Licence from the Department of Water and Sanitation, and will continue to engage with the Department in this regard.”
Coal of Africa is an AIM, ASX and JSE listed coal exploration, mining and development company with operations in South Africa.