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Firestone moves closer to Eskom supply agreement

Firestone moves closer to Eskom supply agreement

Photo by Bloomberg

23rd May 2013

By: Natalie Greve

Creamer Media Contributing Editor Online

  

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JOHANNESBURG (miningweekly.com) – Dual-listed Firestone Energy on Thursday published an interim resource statement for its joint venture (JV) Waterberg coal project, where production is set to start in the second half of 2015.

Drilling results have confirmed the gross tons in situ to be 1.09-billion tonnes and the combined indicated and inferred resource to be 92.31-million tonnes.

The interim resource statement covered two properties of the four farms held by Sekoko Coal, with which Firestone shareholder Ariona held a formal share sale and purchase agreement.

The project’s technical team confirmed that the bankable feasibility study (BFS) was now scheduled for completion by the end of June.

The delivery of the BFS was one of the key conditions required to convert an agreement between Firestone and Eskom – which outlined the supply of ten-million tonnes a year to the parastatal – from a memorandum of understanding to a coal supply agreement (CSA).

The finalisation of the CSA also required that Eskom be satisfied with the quality of the coal and that an agreement determining the price of the coal be finalised.

“The coal price negotiations are expected to start in the second half of the year, and Eskom have indicated that they may embark on a bulk sample burn test to confirm the coal qualities, the results of which may only be available in first half of 2014,” Firestone CEO David Knox said.

Based on the current timetable, production was expected to start in the latter half of 2015, following completion of the CSA and the confirmed drawdown of project financing facilities.

The resource update came as JV partner Sekoko Resources received conditional approval for a three-year coal export entitlement of 51 000 t over a 12-month period under the Quattro Allocation Scheme.

The scheme provided for four-million tonnes a year of export entitlement to black-owned companies through the Richards Bay Coal Terminal.

Edited by Mariaan Webb
Creamer Media Contract Publishing Editor

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