Mozambi Coal (ASX: MOZ) has been granted a trading halt by the ASX pending an announcement regarding 'the acquisition of a new exploration license and a potential capital raising', with the company's shares placed in pre-open.
Mozambi has not yet indicated the location of the potential new license or where an injection of funds would be allocated, but the company has recently been active in one of the world?s largest undeveloped coal basins - the Zambeze basin in Mozambique.
Highlighting the potential for Mozambi in the basin, Riversdale Mining (ASX: RIV) has already identified 13 billion tonnes of coal.
The Riversdale projects include Zambeze, where 9 billion tonnes of coal has been identified over 22 coal seams, with an agreement in place for Wuhan Iron & Steel to acquire 40% of project for US$800 million.
At Benga, 4 billion tonnes have been identified with a mining contract granted by Mozambique government for a 20 million tonnes a year operation.
Vale (NYSE: VALE), owns the Moatize Project with a resource of 1.4 billion tonnes, and is set to commence production this year at a rate of 11 million tonnes per year of coking and thermal coal.
The Mozambi tenements
Mozambi has the right to earn a 70% interest in two licences covering an extensive 385 square kilometres.
One of Mozambi's licences is located 12 kilometres west of Tete and extends over 172 square kilometres. Tete is 1100 kilometres north of Maputo, the capital of Mozambique and is serviced by several airline flights daily.
Upgrades and refurbishments to port and rail infrastructure will enable capacity growth in the next 3 to 5 years. Road and other modern communications facilities have been upgraded and the Moatize to Beira railway has been recently re-commissioned by the Mozambique Government.
Not to be outdone by Riversdale in the potential scale of the its coal target, Mozambi has established an exploration target between 3.1 and 3.9 billion tonnes of coking and thermal coal.
Major shareholder support for Mozambi
Natural resource investment company Polo Resources (LON: POL, TSX: POL), run by Stephen Dattels, has a very bullish opinion of Mozambi.
Polo has been building a substantial stake in Mozambi, and acquired another 1.5 million shares earlier in the year from on-market to now hold 12.51% of the highly prospective coal explorer.
Dattels has a solid understanding of African resources, and has made some substantial investments that have paid very high returns.
These include the sale of a holding in UraMin to Areva for $2.5 billion.
Polo is also a major investor in Caledon (ASX: CCD), and has been busy acquiring various coal interests worldwide.
MOZ Price at posting:
26.5¢ Sentiment: ST Buy Disclosure: Held
