the making of the monster, page-10

Just to set the record straight - we are talking about unlisted Asenjo Energy here (50% owned by ASX listed Aquila Resources (AQA), not AFR. AFR's Sese Thick-seam Coal Leases are not exactly close to Conti's Serowe leases, but the comparison is still a valid one, if we are looking at potential valuation comparisons for our Botswana prospects.

Here are the details from the ContiCoalers article (minus pics/maps):

Asenjo Energy is a JV company which has Aquila Resources as a primary shareholder (50%). Asenjo Energy has about 10 billion tonnes [JORC-compliant] of export and domestic quality thermal coal resources identified in Eastern Botswana, spread over 3 main areas - Western Mmamabula, Lechana/Tshimoyapula and Dukwe.

In regards to Continental Coal's two Serowe licences, it is the Lechana/Tshimoyapula project which we find interesting in respect to the fact that it is sandwiched between Continental Coal's Serowe Licenses.

It is a safe assumption that whatever coal seams have been discovered in the Asenjo licenses also run in Continental Coal's Serowe land. So what do Asenjo have at Lechana & Tshimoyapula?

In the both licenses, Asenjo have discovered 2 coal seams - The Morupule Main Seam as well as the Taukome Bright Seam. Both seams contain high quality thermal coal.

For Lechana, Asenjo have a JORC compliant resource of 968 million tonnes.

... and for Tshimoyapula have a JORC compliant resource of 1,382 million tonnes.

In total, Asenjo Energy have a JORC compliant resource of 2.35 billion tonnes at these projects. It has been confirmed that further exploration will take place with a view to increasing the resource base as well defining a measured resource. It should be noted that much of Asenjo Energy's license area has yet to be explored.

What this means for Continental Coal is that from an investment perspective, the acquistion of the Serowe licenses are immensly derisked, with a minimum expectation of a 2.5 billion tonne resource considering the similar size of both company's license areas. Of course with a thorough drilling program, Continental Coal should be able to increase the resource base expectation significantly.

Lechana Power Project
In August, Asenjo Energy submitted a proposal to the appropriate authorities, the Mmamabula Coordinating Unit (MCU) in Botswana for the development of a mine/power station complex at Lechana.

This project consists of a complex capable of supplying 20MW to 50MW in a reasonably short time frame. The project is located some 12km west of the A1 highway in close proximity to the town of Serowe and some 47km NW of Palapye.

It is envisaged the construction phase for this project will be approximately 24 months, with an additional period of approximately 12 months for completion of the appropriate EIA and financing arrangements. The area is also known to contain large resources of groundwater as well as two large seasonal rivers (from historical drilling). A potential opencast block has been identified at Lechana, containing the Taukome Bright seam at relatively shallow depths for quick exploitation.

The Morupule Main seam is also suitable for the production coal to be used in a domestic power plant which is why Asenjo is looking towards developing a power station here. What this means for Continental Coal, is that there are options to export coal once the transport infrastructure is in place, as well as a possible agreement to supply the Asenjo Power Station with domestic quality coal. Due to the synergistic nature of both company's licenses, there may even be an opportunity for Continental Coal to engage in a joint venture or sell the Serowe licenses to Asenjo Energy further down the track.

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