Coal-mining junior part of consortium vying to participate in running of Trans-Kalahari rail link
By: Jonathan Faurie 18th February 2011 TEXT SIZE ASX-listed coal-mining junior Continental Coal has been included in a consortium which has been shortlisted by the government of Botswana, along with a number of other preferred participants, to participate in the running of the Trans-Kalahari rail link between Gaborone and Walvis Bay.
The ambitious project has been necessitated by rail inefficiencies experienced in South Africa, where parastatal Transnet Freight Rail has been struggling to overcome logistics inefficiencies when delivering coal to the world?s largest coal export terminal, the Richards Bay Coal Terminal.
Continental CEO Don Turvey reports that, although there have been many rumours over the years regarding the future of this project, the current round of discussions is serious.
?This will be a major step forward for the logistical movement of a key commodity. It would put the coal-mining industry in Botswana on the map and would reinforce the country?s position as an innovator within the industry,? says Turvey.
This coincides with the company?s exploration work in Botswana.
Turvey points out that the company is not in a position to release too much information on its Botswana resource as exploration work in the country is only in the preliminary stages. Continental is only now gearing itself up to move into prefeasibility studies.
Meanwhile, the company is mulling the development of a multimillion-rand underground mine in Ermelo, Mpumalanga.
Mashala Resources, part of the Continental Coal group, reports that the company is expecting to spend over R500-million to develop its new De Wittekrans project.
Continental Coal COO Johan Heystek says that, although no capital has been approved for the project, through past experiences in developing mines with similar resources, significant capital will be needed.
?The company is in the process of looking for funding. Obviously, a portion of the funding will be supplemented by the Penambra project, near Ermelo, which is up and running. Conti- nental is looking at targeting an equity-to-debt ratio of 30:70, which the company will pay off within a five-year period,? says Heystek.
Another concern for the company is whether it will build an additional washing plant or use the existing plant, which is currently bene- ficiating the coal at Penambra. Heystek adds that this will be discussed with project house TWP and will be finalised soon.
?The bankable feasibility studies for De Wittekrans will be completed by the end of June. Development will start during the second half of the year, with full ramp-up expected by mid-2012,? says Heystek.
This will add significant value to the company that already exports in excess of 50 000 t/m through the Richards Bay Coal Terminal.
Initial resource estimates for the De Wittekrans project are 206-million tons with a life-of-mine of 30 years.
Heystek points out that, in addition to this resource estimate, the company has three other resources that lie adjacent to De Wittekrans that will add a further 367-million tons to the resource.
Edited by: Martin Zhuwakinyu
CCC Price at posting:
76.0¢ Sentiment: Buy Disclosure: Held
