Name and Location
Makhado coking coal project, Limpopo, South Africa.

Client
Baobab Mining & Exploration, a subsidiary of Coal of Africa Limited (CoAL).

Project Description
The Makhado project is CoAL’s anchor project in the Soutpansberg coalfield, in Limpopo, where the company has access to a significant hard coking and thermal coal resource, with the gross tonnes in situ estimated at eight-billion tonnes.

A definitive feasibility study has defined a 16-year life-of-mine, with mining expected to take place at an average rate of 12.6-million tonnes a year of run-of-mine to produce 2.3-million tonnes a year of hard coking coal and 3.2-million tonnes a year of thermal coal at a steady state.

The resource will be mined on an opencast basis, with potential underground expansion.

The project has been divided into three mining areas for technical, logistical and practical reasons – East pit, Central pit and West pit.

Mining will be staggered, starting with the East pit, followed by the Central and West pits. The development of the East pit will include plant and infrastructure components, which will cater for the production volumes from the other pits.

The processing plant will comprise:
• a double-stage dense-medium separation plant for the destoning and beneficiation of the hard coking coal and the thermal product, achieved through a high-gravity wash and followed by a low-gravity wash for the coarse-size fraction of –50 +1 mm;
• a fines (–1+0.15 mm) circuit, encompassing a low-gravity reflux classifier process for the production of the coking coal, and a high-gravity reflux classifier for the production of the thermal product; and
• an ultrafines (–0.15 mm) circuit of Jameson column flotation cells for the production of the coking coal and a potential thermal product.

Net Present Value/Internal Rate of Return
Not stated.

Value
Capital expenditure is pegged at R3.96-billion, including contingency.

Duration
Not stated.

Latest Developments
CoAL has obtained the mining right for its Makhado hard coking and thermal coal project.

The company announced on May 18 that the Department of Mineral Resources (DMR) had issued a new-order mining right (NOMR) for the flagship project, in addition to a Section 11 approval transferring the right from CoAL to its wholly owned subsidiary and the project’s developer Baobab Mining & Exploration.

Discussions with potential customers to secure offtake agreements for the coal products have been initiated following the granting of the NOMR.

Further, it is expected that the NOMR will also unlock funding opportunities for the development of the project, the construction of which will start in the first half of 2016 and which is expected to be completed within 26 months.

After a four-month ramp-up phase, the emerging colliery will deliver 5.5-million tonnes a year of saleable product.

Meanwhile, the Section 11 approval has allowed the Makhado Colliery Community Development Trust, which represents seven local communities, to acquire a 20% stake in Baobab, with Yoright Investments, which has been founded by black entrepreneur Mike Nkuna, obtaining a 6% stake in the project.

Both parties now have two years to raise funding to acquire their interests with the final amount payable subject to due diligence negotiated with CoAL.

CoAL is still awaiting the approval of the integrated water-use licence from the Department of Water and Sanitation.

Key Contracts and Suppliers
Too early to state.

On Budget and on Time?
Too early to state

Contact Details for Project Information
CoAL head of engineering Nico Pretorius, email nico.pretorius@coalofafrica.com; or investor relations and business development manager Celeste Harris, email celeste.harris@coalofafrica.com.