local mantle mining news, page-12

'Yep the word from Ian is both the moisture levels and the mining grants "should" be known by the end of the month.'

And in yet another mere coincidence - the end of March 2011 sees the 2nd Victorian Clean Coal Conference. Both CCV and Exergen are key speakers at the conference.

What better forum to unveil the moisture reduction results, and a grant of EL5294?

MNM have pegged every square metre surrounding the operating Maddingley brown coal mine at BM (Mining Lease 4701). They used brown coal taken from Maddingley (with, obviously, the full cooperation of the owners of the mine) as the 20 tonne bulk sample test. MNM have told us they are in positive discussions with the owners of Maddingley about potential development of that mine.

The Calleja family own and operate the Maddingley Mine site, and plenty of other land within EL5294 that is no doubt full of similar quality brown coal. MNM may only need to enter into a royalty sharing deal with them to get access to enough brown coal to make BM the obvious site of the first exergen brown coal operation. The Calleja's have been looking for ways for years to commercialise the site of the Maddingley mine. They had hoped that ESI may purchase the stuff for use in their project, but there is no credible sign of that happening any time soon. So they are now talking to MNM.

With EL5294 effectively a huge ring around the Maddingley mine (see the 9/12/10 MNM ann for a diagram) it seems pretty obvious that the exergen/mnm plan is to begin sourcing brown coal to feed their plant from out of the heart of the existing Maddingley open pit mine (see MNM ann 11/1/01 for a series of photos of the 'walls' of brown coal at Maddingley, and better yet, shots of MNM Geo's all over them). By controlling all the brown coal all around the heart of Maddingley the MNM/exergen JV can then expand the pit in concentric circles for the anticipated 30 year life of the project. If they process 2 billion tonnes of brown coal to sell to TATA power and others it will have an equivalent value of 1 billion tonnes of black coal. Assume an average of say $100 per tonne = $100 billion dollars in potential revenue over 30 years.

MNM will have an entitlement to 50% of that revenue. A conservative 10% profit margin would see $5 billion potential profit to MNM over 30 years, or an average of $166 million per annum to MNM.

Which would demand a share price of $4+ on current 200 million shares on issue.

Of course a project of this scale would be complete fantasy for a tiny company like MNM. But it is not fantasy at all for the likes of TATA, Itochu, Sedgman and Thiess, the owners of exergen. Somehow, MNM have attached themselves to these global titans, and have been gifted a 50% interest in the JV.

Good luck to anyone trying to stop this consortium of the heaviest of heavy hitting coal players from getting at the kind of $ on offer in developing Victoria's brown coal reserves. If the technical matters are good enough, namely they have access to enough brown coal which is able to be processed to export grade by the exergen process, this project will happen. The two keys to that are the moisture reduction tests, and the grant of EL5294, both of which may be known within days.