thermal coal project environmental nod

Xceed Resources lands environmental nod for Moabsvelden thermal coal project
Tuesday, September 10, 2013 by Proactive Investors



Xceed Resources' Moabsvelden coal project in South Africa

Xceed Resources (ASX: XCD) has taken another step towards development of its 70% held Moabsvelden thermal coal project in South Africa with the grant of environmental approval by the Mpumalanga Provincial Government.

The company has already received the Mining Right and now expects the third and last major licence, the Integrated Water Usage Licence, to be granted in due course.

It noted that discussions with the Department of Water Affairs in regard to this final licence are at an advanced stage.

Moabsvelden will be one of the largest new mines located in the vital Witbank coal basin when developed, and importantly its close proximity to Johannesburg is an advantage over other mines - giving it access to industrial/inland market in South Africa.

In addition, the project will be entirely open cast with a low stripping ratio. Mine life is expected to be in excess of 14 years while production is targeted for mid-2014.

Coal offtake

The company is in negotiations with South Africa utility Eskom in regard to a proposed coal supply agreement.

Eskom has a requirement for different coal qualities to be delivered to a number of power stations and the negotiations are currently focused on what would be the optimal mix of products and destinations having regard to the differing coal yields and transport logistics.

The utility is currently building the Kusile and Medupi coal-fired power stations that will be the third and fourth largest in the world with generation capacity of 4,800 megawatts and 4,764MW respectively.

Analysis

With two out of three key licences in place, Xceed remains on track for first production from Moabsvelden in mid-2014.

This would allow the project, which is located just 50 miles from Johannesburg, to capitalise on demand with Eskom building the third and fourth largest coal fired power stations in the world.

Another plus is that all mine production is by means of a single box cut, thereby avoiding the need for expensive development in future.