https://www.miningweekly.com

Oakbay seeks to shed light on its operations, upbeat about future prospects

Oakbay’s coal mining subsidiary Tegeta Exploration and Resources’ Brakfontein mine

Oakbay’s coal mining subsidiary Tegeta Exploration and Resources’ Brakfontein mine

Photo by Duane Daws

9th September 2016

By: Ilan Solomons

Creamer Media Staff Writer

  

Font size: - +

JOHANNESBURG (miningweekly.com) – In an attempt to highlight that its revenue is largely driven by private-sector deals – with government contracts accounting for only 8.9% of revenue generation – controversial investment holding company Oakbay Investments on Thursday released its first annual results for the year ended February 29.

The group’s mining division contributed R1.1-billion out of the R2.6-billion in revenues for the year. Oakbay’s mining division’s largest company, with 2 780 employees, is underground mining contractor JIC Mining Services, which is responsible for the bulk of the division’s cash flow.

Speaking to Mining Weekly Online on Thursday, JSE-listed Oakbay Resources & Energy CFO Trevor Scott noted that JIC had never had any government contracts. He further pointed out that the company was a lossmaking business prior to Oakbay buying it in 2006.

Scott commented that JIC performed “highly specialised work” for a number of major players in South African mining, with some of the company’s customer relationships having been in place for over 18 years. He remarked that the nature of demand for JIC’s services had changed, with the commodities cycle having in the past been heavily focused on the gold mining sector. “Currently, demand is particularly strong from platinum producers.”

JIC’s customers are based around the Rustenburg area, in the North West. Scott contended that, during the period under review, JIC had cemented its position as one of the top three mining support services providers in the country, despite the general commodity downturn.


“The results overall for the company’s mining division are very promising and indicate that we are well positioned for further growth. It is important to note that the effect of our coal mining subsidiary Tegeta Exploration and Resources buying Optimum Holdings’ coal assets in Mpumalanga for $137-million – which include Optimum and Koornfontein coal mines – has not been reflected in the current financial results,” Scott clarified.

GOLD AND URANIUM
Oakbay owns the Shiva Uranium gold and uranium mine, in Hartbeesfontein, in the North West. The mine has a total gold resource of 5.2-million ounces and an estimated 16-year mine life, with potential to extend this to 100 years.

Shiva’s exploration and mining operations are focused on the Dominion group and the West Rand group of the Witwatersrand basin. The West Rand group’s gold section offers up about 65 000 t/m run-of-mine (RoM), but this is in the process of being increased. The overall processing capacity for the Dominion reef is 250 000 t/m RoM.

According to the company’s 2016 integrated annual report, the mine produced 377 kg of gold during the year with an average in situ gold grade of 1.1 g/t and a gold recovery rate of about 0.6 g/t. 

Oakbay Resources & Energy CEO Jacques Roux stated that he was happy with the current output from Shiva’s opencast gold mine, which is currently producing an
average of 65 000 t/m of RoM feed.

The company is aiming to get the mine’s carbon-in-leach (CIL) gold treatment plant as close as possible to its 120 000 t nameplate processing capacity. The CIL plant has four mills, with only two currently in operation. Roux said that Shiva intended to bring a third mill on line by mid-October and to recommission the fourth mill by the end of this year.

“It is unlikely, owing to the age of the plant, that it will reach nameplate capacity. However, we would be satisfied if it could run between 90 000 t and 100 000 t of material on a consistent basis,” Roux enthused, adding that the company would also seek to improve the plant’s gold recovery rate to between 0.7 g/t and 0.8 g/t.

While the company is currently mining the opencast section of outcropping gold-bearing reefs at the Shiva mine, underground gold-bearing orebodies will be accessed when the underground mining of the uranium reefs commences.

The mine has uranium mineral resources of 196-million pounds of contained uranium oxide, with an average grade of 428 g/t. Shiva’s uranium operations are currently in the development phase, while the company is in the process of updating its existing bankable feasibility study to take into account additional uranium mineral resources on the property, which are currently the subject of a new exploration programme, as well as the impact of new RoM sorting technologies.

Roux noted that the significant quantities of gold found in the orebody meant that, while the uranium mills were under care and maintenance, the mine continued to be profitable, which enabled it to continue employing its more than 700 workers. He added that, once uranium mining became commercially viable again, the uranium would be in high demand in the export market for countries’ power generation requirements. Shiva currently has a stockpile of about 120 000 t of uranium.

“To be very clear, as there has been much misunderstanding about this matter, our uranium operations have nothing to do with the wider South African nuclear story. Our expectation is that our life-of-mine will have comfortably passed before South Africa is ready for nuclear,” emphasised Oakbay Investments CEO Nazeem Howa.

COAL OPERATIONS
Tegeta’s oldest coal asset is the Brakfontein colliery, which is 20 km from Delmas, Mpumalanga, and produces 100 000 t/m of coal.

The Brakfontein coal mine received its water-use licence in December 2014, enabling it to commence mining and supply State-owned power utility Eskom with coal from April 2015.

Scott noted that, for the period under review, Brakfontein supplied 1.49-million tons of coal to Eskom. “This constituted just 1.25% of Eskom’s total coal supply. Oakbay’s 29% share in Tegeta equates to 0.43-million tonnes of supply and just 0.36% of Eskom’s total coal supply. This coal was sold to Eskom at a rate of R270/t,” he revealed.

The Brakfontein extension project is located directly opposite the existing operation and, following a six-month delay owing to geological challenges, started full-scale coal production earlier this month. Tegeta expects the Brakfontein extension to produce about 70 000 t of coal this month. However, once the mine has completed full ramp up over the next two to three months, it will also produce 100 000 t/m of coal.

Meanwhile, Optimum mine was released from business rescue status on August 31, which comes just five months after its acquisition by Tegeta.

Roux said that Tegeta had been able to grow production and enhance efficiencies to bring down the cost of coal production at Optimum and Koornfontein. He noted that, for example, at Koornfontein, coal production between April 2016 and July 2016 increased from 170 000 t/m to 250 000 t/m. Simultaneously, the cost of production per ton had been reduced by 21%.

“Plans are currently being developed to launch an opencast operation at Koornfontein, which will create further jobs in the area,” Roux added.

At Optimum, a second dragline is currently operational, with a third expected to come on stream during the third quarter of the year. Roux highlighted that opencast coal production had increased from 180 000 t/m in December 2015 to 440 000 t/m in July 2016, while production costs had been reduced by 28%.

He further pointed out that underground coal production at Optimum had increased from 370 000 t/m to 420 000 t/m, while production costs had been reduced by 10.2%. Roux added that export-quality coal was being produced at Optimum and Koornfontein, for which it had already signed offtake agreements.

Meanwhile, Scott added that the export of coal from both mines was of “vital importance” to offset the losses the company was incurring from having to supply Eskom with coal from Optimum at just R150/t. This is owing to an agreement between the mine’s previous owner, diversified mining and marketing company Glencore, and Eskom, which runs until 2018.

“The export ceiling for the coal from both mines at current market conditions would be about 6-million tons to 7-million tons a year,” he stated.

Additionally, Tegeta’s project portfolio also includes the Vierfontein colliery, which is near the town of Ogies, and the De Roodepoort project, located in Ermelo, both in Mpumalanga. Tegeta also holds prospecting licences for the Syferfontein project and the Welgezegend project, in Standerton, Mpumalanga.

The Vierfontein colliery has recently been granted a water-use licence and is aiming to start mining operations by the end of this year or early in 2017, once it has completed certain environmental rehabilitation in the area.

Tegeta also has prospecting rights for the De Roodepoort project and prospecting is at an advanced stage. However, development of this project has been “temporarily halted” to enable Oakbay to focus its efforts and resources on its other mining operations.

Edited by Samantha Herbst
Creamer Media Deputy Editor

Comments

Latest News

Kropz Elandsfontein
Kropz secures R170m loan facility
27th March 2024 By: Darren Parker

Showroom

SBS Tanks
SBS Tanks

SBS® Tanks is a leading provider of innovative water security solutions with offices in Southern Africa, East and West Africa, the USA and an...

VISIT SHOWROOM 
Booyco Electronics
Booyco Electronics

Booyco Electronics, South African pioneer of Proximity Detection Systems, offers safety solutions for underground and surface mining, quarrying,...

VISIT SHOWROOM 

Latest Multimedia

sponsored by

Hyphen, Eva mine, ferrochrome price make headlines
Hyphen, Eva mine, ferrochrome price make headlines
27th March 2024
Resources Watch
Resources Watch
27th March 2024

Option 1 (equivalent of R125 a month):

Receive a weekly copy of Creamer Media's Engineering News & Mining Weekly magazine
(print copy for those in South Africa and e-magazine for those outside of South Africa)
Receive daily email newsletters
Access to full search results
Access archive of magazine back copies
Access to Projects in Progress
Access to ONE Research Report of your choice in PDF format

Option 2 (equivalent of R375 a month):

All benefits from Option 1
PLUS
Access to Creamer Media's Research Channel Africa for ALL Research Reports, in PDF format, on various industrial and mining sectors including Electricity; Water; Energy Transition; Hydrogen; Roads, Rail and Ports; Coal; Gold; Platinum; Battery Metals; etc.

Already a subscriber?

Forgotten your password?

MAGAZINE & ONLINE

SUBSCRIBE

RESEARCH CHANNEL AFRICA

SUBSCRIBE

CORPORATE PACKAGES

CLICK FOR A QUOTATION







sq:0.105 0.14s - 90pq - 2rq
Subscribe Now