coal and eskom

MMAMANTSWE PROJECT BOTSWANA
During the quarter Aviva reached a significant milestone with the announcement of a
1.3 billion tonne indicated resource for the Mmamantswe coal project in Botswana.
Geological modelling indicates the deposit will have a very low stripping ratio of
around 1 bcm of waste per tonne of coal.
Washability test work shows that the coal can be beneficiated to produce a 19-20MJ/kg
thermal coal with a moderate ash content of 25-30% and a sulphur content of less than
0.5%. The washability yields of around 45% indicate 600Mt of washed product could
be produced from the deposit.
During the quarter, the South African power utility Eskom, issued a request for
information on coal deposits capable of supplying coal for 40-60 years. Aviva has
submitted a proposal to supply between 6-12Mtpa of washed coal. We do not expect a
response to the proposal until the September quarter.
A comparison of the specification sought by the Eskom Request for Information (RFI)
and the washability test work completed on the Mmamantswe project at relative
densities of 1.80 and 1.90 is tabled below.
INDICATED RESOURCE RD 1.90 RD 1.80 ESKOM RFI
Ash % ad 30.1 25.2 <50
Calorific Value
GJ/t
ad 18.3 20.1 12 – 25
Inherent Moisture % ad 5.4 5.8 12 (%TM)
Sulphur % ad 0.4 0.4 <2.5
Volatiles % ad 24.1 25.6 18 - 34
Cumulative Yield % 52.5 42.2 NA
Tonnes Mt 662.9 504.5 380 - 790
Appendix 5B
Mining exploration entity quarterly report
+ See chapter 19 for defined terms.
30/9/2001 Appendix 5B Page 4
The washed coal from Mmamantswe comfortably meets the Eskom specification and
volume requirements. The competitive advantages offered by Mmamantswe coal are
low sulphur content, large tonnage and proximity to new power stations currently under
construction just across the border in South Africa.
The company continues to progress its 1,500MW power generation proposal. The
increase in the resource to 1.3 billion tonnes will enable Mmamantswe deposit to supply
both 6Mtpa for external sales and 6Mtpa for a 1,500MW power development.
PB Power is drafting a Request for Proposal which will invite offers from selected
equipment suppliers for the construction of the power station. It is expected that this
will be issued shortly.
A Reserve drilling program has commenced at Mmamantswe, with three drill rigs
mobilising to site. The program of 16,000 metres is designed to;
• Upgrade 50% of the resource to reserves.
• Provide samples for coal quality test work.
• Provide samples for coal preparation test work and design
• Provide resource and geotechnical information for a Mine Feasibility Study.
The total program is budgeted at around $3 million. Drilling is expected to be
completed by the end of August and the coal preparation test work will be completed by
the end of the year.
Project Geological firm, Rock & Stock will again assume responsibility for all aspects
of the drill program. Rock & Stock have engaged two Batswana geologists who will be
working on this program.
Coal preparation test work will be supervised by AB Mylec, a Queensland based coal
preparation consultant with a presence in South Africa. The laboratory analysis will be
undertaken at the Witlab coal laboratories in Witbank, South Africa.
A water exploration program has been commissioned and the desktop phase has been
completed, identifying potential water sources sufficient to wash 6Mtpa of coal and
supply a 1,500MW power station. An exploration drilling program is being rolled out
which will be completed this year. The total cost of this program is estimated at $1.4
million. The field water program is being undertaken by KLMCS and Arcus Gibb
through their offices in Botswana.
Aviva has commenced discussions with potential customers for power in the Southern
African Power Pool, and is confident that the demand outlook for Independent Power
Producers (IPP’s) looks extremely robust in the next decade. During the quarter Eskom
cut power supply to major mining companies by 10%. Eskom has commenced
construction of the next major base load power station but this will not be
commissioned until at least 2012.