By: Esmarie Swanepoel21st January 2011 Australian resources...

By: Esmarie Swanepoel
21st January 2011


Australian resources development company Aviva Corporation will be looking to simplify its asset portfolio during 2011, CEO Lindsay Reed tells Mining Weekly.

He says that the company will appoint advisers to assist with the process.

Aviva currently holds the Coolimba coal project, in Western Australia, as well as the Mmamantswe coal project, in Botswana, and the West Kenya base-metals and gold project.

"I think that any of these three assets can justify our share price as it is but, to some extent, it confused the market," says Reed.

As part of this simplification process, he says, Aviva could investigate the possibility of divesting some of these assets.

Aviva has managed the Coolimba project from target definition through to exploration, feasibility studies and environmental approvals to its current status as a ready-made development for power generation.

Reed says that Aviva is currently in discussions with an interested party that is looking to build a power station at the Coolimba site in order to supply Chinese mining operations in Australia with electricity.

"Apart from furnishing them with the information and assisting them in every way we can, that project is now pretty much out of our control, and we will wait and see what happens with it."

Reed says that divesting itself from the Coolimba project would be "a very good outcome for Aviva shareholders, and could most likely realise the entire market capital of the company " .

Meanwhile, he notes that the Mmamantswe project, in Botswana, is also firmly "back on the plate" for 2011, after the project was initially written off.

During November last year, Aviva reported that it was unlikely to proceed with a planned 1 000-MW coal-fired power station project at the Botswana project. The statement was made after South Africa released its Integrated Resource Plan (IRP) during October that year, which stated that the country would not provide for any independent coal-fired power until 2027.

Reed says that the IRP is "a mile" away from anything that Aviva has planned for the Mmamantswe project, and subsequently put the project on the back burner.

However, Reed tells Mining Weekly that the recent purchase of fellow coal developer CIC Energy by an Indian conglomerate has again drawn attention to the potential of the Mmamantswe project.

Aviva is now investigating the possibility of exporting some of the Mmamantswe coal, while the balance of the coal product can be used in smaller, fluidised-bed power stations.

"The initial results from those studies are way better than I thought they would be," Reed says.

Whether Aviva will take an interest in building the small power stations is as yet unclear, however, Reed says that the company will be taking a decision on the Mmamantswe project within the next three to six months.

"We are looking at everything, from divesting the project to adding other projects to it in order to beef it up. Everything."

At the West Kenya project, Aviva will spend around $3-million on exploration by September or October in order to achieve a 51% shareholding in the project.

The West Kenya project, which was a joint venture project with resources developer Lonmin, hosted both gold and base-metals resources. Reed says that Aviva was looking to increase its stake in the West Kenya project to 75% by completing a prefeasibility study by the end of this year.

"I would like to have one of the projects in the prefeasibility stage and, at the moment, we are going back to drill more holes at Bumbo, and so far we are happy with the results that we are getting there."

Aviva Corporation is an exhibitor at the Mining Indaba 2011.
Edited by: Brindaveni Naidoo