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Diversified junior completes mine scoping with positive results

1st March 2013

  

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Diversified mining junior Hodges Resources, which is currently focused on projects in Botswana, reports that it is pleased with the outcome of completed mine scoping and power integration studies for its Morupule South coal project, which confirm the project’s financial viability.

The studies provided the company with a number of economically sound development options, and, as a result, it approved feasibility phase studies for an initial start-up development of about two-million tons a year to three-million tons a year, with a ramp-up to five-million tons a year within three to five years.

Hodges set out in May 2011 to increase its understanding of the geology and mineability of the Morupule South project.

Hodges Resources MD Mark Major says that the scoping study has delivered significant independent information that confirms the technical viability of mining the Morupule coal basin through the options being considered and was compiled by a number of independent consultant reports.

“After extensive evaluation of all the independent studies, the board has approved the beginning of feasibility level studies to refine the operational and capital cost estimates associated with a staged development of an up-to-ten-million-ton-a-year run-of-mine (RoM) coal operation,” he says.

 

The Morupule South project will be located in the eastern central area of Botswana, in the Central district. Its exact location is south of the current opera- tional Morupule Colliery mine and power stations, which lie about 280 km north of the country’s capital, Gaborone.

Morupule South is situated within the subbasin of the Karoo Supergroup, which predomi- nantly consists of shale and mudstone, with subordinate amounts of siltstone, coal, sandstone and tillite.

The study on mine design, equipment selection, mine scheduling, coal processing and handling and development of the scoping study and cost inputs for the mining components of the project, as well as financial modelling of a 1.5-million-ton-a-year operation, was carried out by engineering and project management company RSV International.

 

Planning, engineering, and programme and construction management organisation Parsons Brickenhoff carried out the integrated power station concept studies, the electricity demand review and supply assess- ments, while the coal price forecasts and benchmarking were carried out by research and consulting service provider Wood Mackenzie.

Further, geological consultancy Gemecs carried out the geological modelling and resource development, and Australia-based commercial adviser Johnstaff Projects was responsible for the coal logistics overview.

Life-of-mine (LoM) production costs for 1.5-million tons a year, five-million tons a year, and five-million tons a year to ten-million tons a year were identified at $10.18/t, $10.59/t and $10.96/t respectively on an owner-operator basis, and at $12.90/t on a 1.5-million-ton-a-year contract mining basis.

Capital cost estimates for developing a 1.5-million-ton-a-year operation were estimated at $55.76-million for a contractor model and $111.10-million for an owner-operator model, which includes contingencies estimated at 30% and engineering, procurement and construction management at 12%.

“The low mining costs and the coal’s physical properties allow Hodges Resources the luxury of looking at various project development options going forward,” Major notes.

The current Australian Joint Ore Reserves Committee-com- pliant resource estimate for Morupule South stands at 2.45- billion tons, of which 110-million tons is measured, 173-million tons indicated and 2.167-million tons inferred.

 

The Morupule main seam, which consists of a top and bottom seam, represents over 80% of the resources and these have an average thickness of over 17 m combined. The total RoM tons were estimated at 2.08-billion tons.

Sound economics were also produced for the development of underground operations in the north-west block of the Morupule main coal seam.

 

Future Growth

The studies have also identified areas where additional operational as well as possible capital cost savings could be achieved. Through this work, the company has now confirmed the potential for a robust project.

Major said that confirmation of the potential to develop the project through a staged process had a material impact on the company’s attitude towards feasibility.

The entire resource area has the potential for an LoM of more than 96 years at a production rate of 20-million tons a year; however, only an LoM of 30 years was modelled in the current study.

“Despite having the resources to support this, a RoM production scenario of 20-million tons a year has not been considered appropriate at this stage – not until developments are made to the existing rail and port infrastructure of Botswana,” he says.

Hodges Resources will instead focus on the feasibility of an initial stage of operation, requiring less capital and supporting an operation for the regional coal markets with a RoM ranging from 1.5-million tons a year to 3-million tons a year.

Following the scoping studies, the company says it is confident that there is sufficient electricity demand to support the integration of the small-scale power plant at Morupule South and, in doing so, create an immediate market for the mine’s product, given its proximity to an existing grid.

Power generation studies confirm the economic viability of developing a modular power generation plant with capacities ranging from 300 MW to 800 MW.

“We have a clearer view now on the commercially viable opportunity to develop a mine in a staged and less capital-intensive manner, and to deliver product to satisfy Botswana’s emerging and increasing power requirements while longer-term infrastructure developments are developed in the region,” states Major.

The prospecting licence area covers 264.4 km2. The area of focus for the initial mining operations is concen- trated in the lower strip ratio areas situated on the south-east portion of the prospecting area as well as the area where measured resources were recently developed in the central block.

The mine design in the scoping study is based on conventional opencast strip mining. The opencast operation has multiple economic seams and a strip method of truck-and-shovel mining, as this allows for a roll-over methodology for mining, with multiple benches providing flexibility that would allow each seam to be mined separately for batch processing for different markets, if required.

The opencast mining operation will start with a boxcut in the first cut. The waste material will be removed and dumped in designated storage areas outside the immediate mining area and will be used again for the final rehabilitation at the end of the LoM.

 

It is estimated that the third or fourth strip will remove the coal and the stripped overburden will be placed back into the voids to develop a steady-state operation.

The waste material will then be sequentially placed in the pit, with rehabilitation occurring as mining advances.

Equipment and Plant Selection Criteria

Mining equipment selections were developed from the produc- tion schedule for each mining scenario. Equipment types were matched to the schedule primarily using load capacity efficacy techniques to create the most optimal use scenario. The secondary aspect of equipment selection decisions related to the potential for the reuse of equipment during possible expansions in the mining operation.

Edited by Megan van Wyngaardt
Creamer Media Contributing Editor Online

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