Ann: Upgrade of Reserves and Resources for Ntende, page-4

re: Ann: Upgrade of Reserves and Resources fo... http://www.proactiveinvestors.com.au/companies/news/43423/ikwezi-mining-upgrades-ntendeka-colliery-resources-by-over-33-43423.html

Ikwezi Mining upgrades Ntendeka Colliery resources by over 33%
Friday, May 17, 2013 by Proactive Investors

Ikwezi Mining (ASX:IKW), which is targeting coal production this September, has increased its resources at its 70%-owned Ntendeka Colliery in South Africa by over 33% with total resources up to 294 million tonnes from 221 million tonnes.

Apart from the resource upgrade, it has also boosted its reserves to 16 million tonnes from 14 million tonnes, which could potentially add to the life of the mine.

The company is primed for production as in addition to strong domestic demand for coal in South Africa, the location of the project within the KwaZulu-Natal coal fields and close proximity to rail and port infrastructure - provides export flexibility via Ports of Durban or Richards Bay, with even a possibility to truck to ports.

Ikwezi has been engaged in exploration activities with geological modeling being undertaken on a quarterly basis. It has also completed mine design and planning for the first seven years of production.

Stefanuti Stocks Mining Services did all the work on reserves that are amenable to open cast mining while Mindset Ltd were used for underground reserves.

The company has optimised the mine design and planning to factor in the current low export market prices, with some of the reserves being removed from the current reserve statement but can be re-introduced during a price up-cycle.

Analysis

The resources upgrade to JORC Resource of 294 million tonnes, is timely for Ikwezi, which is on the threshold of becoming a coal producer and will become cash flow positive in the short term.

With a total of 470 boreholes already drilled within the Ntendeka Colliery’s mining right area, the extension of the drilling program and increase in the total resource and reserve base is expected to add to the life of the mine.

The company has already optimised the mine design and planning to factor in the current low export market prices, with some of the reserves being removed from the current reserve statement but can be reincluded during a price upcycle.