JOHANNESBURG (miningweekly.com) – Aim-listed Beacon Hill Resources (BHR) has completed a definitive feasibility study (DFS) for its Minas Moatize project, in Mozambique, which confirmed a “technically and economically robust” coal mine.

The mine, in the Tete province, would produce 2.2-million tons a year of saleable coking and thermal coal over 11.5 years.

A total Joint Ore Reserves Committee mineable reserve of 42.65-million tons of coal had been indicated, including a marketable reserve of 23.46-million tons, of which at least 8.72-million tons was expected to be coking coal. This would, however, need further work to prove it.

The DFS proved the viability of expanding the Minas Moatize coal operations from underground mining, to openpit. The proposed openpit operation would extract and process about four-million tons of run-of-mine coal at steady state production in 2014.

The project entails the expansion of an existing openpit operation rather than a greenfield development project.

“The economics of the project are not only positive, but are also subject to improvement across a range of areas. With a pretax net present value of $662-million, a marketable reserve of 23.45-million tons of coal, of which over one-third is coking coal, near-term coking coal production and a proven end-to-end export solution, the commercial value of the Minas Moatize project is clearly apparent," BHR chairperson Justin Lewis said in a statement.

The total project capital estimate of $166-million, including $42-million for engineering, procurement and construction management, as well as contingency and other indirect costs, could be reduced to $18-million, using the group's proposed build, own and operate model for key infrastructure items.

“Further, an independent marketing study indicated Minas Moatize hard coking coal would attract a long-term price around standard hard coking coal benchmarks, and there exists significant potential to improve the economics of the project and life-of-mine through further work,” the miner said.

BHR has signed a heads of agreement with mining contractor Basil Read Mining to enter into a contract for mining at Minas Moatize. “Basil Read Mining has the requisite mining experience and equipment available to mobilise to site in the year,” BHR said.

The DFS assumed that BHR would initially transport coking coal by road to the Port of Beira, before using the Sena rail line as production ramps up. The study assumed a cost of $55/t by road, $20/t by rail and port costs of $10/t.

Meanwhile, significant progress continued to be made regarding the Sena rail line, which is significant to the longer-term export capability of the group.

Minas Moatize is a member of Taskforce One, together with miners Vale, Rio Tinto and CFM, which was working with the government of Mozambique to complete the refurbishment of the Sena rail line to an initial capacity of 6.5-million tons a year, and then to a fully operational capacity of 12-million tons a year, later in the year. An allocation on the Sena railway would enable BHR to ramp up export coal production to four-million tons a year.
 

To subscribe to Mining Weekly's print magazine email subscriptions@creamermedia.co.za or buy now.