PERTH (miningweekly.com) - A scoping study into ASX-listed Hodges Resources’ Morupule South coal project, in Botswana, has proven the economic viability, prompting the junior to approve a feasibility study.

“After extensive evaluation of all the independent studies, the board of Hodges has approved the start of feasibility-level studies to refine the operational and capital-cost estimates associated with a staged development of up to ten-million tons a year run-of-mine (RoM) coal operation,” said MD Mark Major.

The feasibility study would consider an initial start-up development of between two- to three-million tons a year, ramping up to five-million tons a year within three to five years.

The scoping study indicated that the Morupule South project could be developed through a staged approach, with later stages including the addition of a washing facility and possible larger RoM production.

Capital cost estimates for developing a 1.5-million-ton-a-year operation had been estimated at A$55.76-million for a contractor model, and A$111.1-million for an owner-operator model.

Major noted that the primary objective of the scoping study was to investigate the fundamental economic viability of the project, coupled with various development options.

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

The study also identified areas where additional operation and, possibly, capital cost-savings, could be achieved.

Major said on Monday that following the scoping studies, Hodges was confident that there was sufficient electricity demand to support the integration of a small-scale power plant at Morupule South, and in doing so, create an immediate market for the mine’s product.

“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.”

While the project currently has a Joint Ore Reserves Committee-compliant resource of 2.45-billion tons, of which 110-million tons is measured, and could support a 20-million-ton-a-year operation, Major noted that this development option would only be considered if developments were made to the existing rail and port infrastructure.