open for business

Mozambican President Armando Guebuza on Tuesday laid the first stone for the construction of an open cast coal mine at Benga, in Moatize district, in the western province of Tete.

The Benga coal concession was granted to the Australian company Riversdale which is projecting an initial extraction of 5.3 million tonnes a year, which will result in about 1.7 million tonnes of high quality hard coking coal, and 300,000 tonnes of export quality thermal coal.

As the mine expands, gross production will rise, perhaps to 20 million tonnes a year.

Guebuza declared that the mine will soon produce jobs, first in the construction phase, then in mining operations. It would "reaffirm our quality and prestige as a safe destination for foreign investment".

Mozambique, he continued, is endowed with vast reserves of mineral and hydrocarbon resources, attracting the attention of both national and foreign investors. Among resources so far untouched are the heavy mineral sands in Chibuto, in the southern province of Gaza, which may contain the largest reserves of titanium in the world.

In addition to its mining concession at Benga, Riversdale holds a further 21 exploration licences covering 250,000 hectares elsewhere in Tete. Benga represents only eight per cent of the area Riversdale is looking at.

Cited in a Riversale press release on Tuesday, the company's Executive Chairman, Michael O'Keefe, declared "Today's ceremony is the start of a programme of building and investment which will eventually result in a billion dollars spent in developing a giant coal mine. This is one of the largest direct foreign investment projects in Mozambique".

Riversdale says that 15 per cent of the project's budget will be spent on the local market, creating opportunities for local companies in Tete and Moatize to supply building materials, furniture and office equipment, as well as food, cleaning services and transport for the mine workers.

Currently Riversdale employs 150 people at Benga. Within five years, O'Keefe expects the number of people directly and indirectly employed by the mine to rise to 4,500.

source: AIM NEWS


And there you have it; RIV is a monster. Congrats to all long term holders. We now enter into a new phase, and I see great growth potential for RIV

VERY rough figures: 1.7 M t met coal @ US$ 200 + 300kt therm coal US$ 100 = Revenue of $ 370M P/E of 10 = $3.7 B valuation. 195M shares on issue = $ 20 sp.

Now, what will be the valuation when we have 5Mt of met coal output; and have looked the other 21 leases. Hence, I still see plenty of upside with this company

Cheers, SKip