Name of the Project
Makhado Lite project.

Location
Limpopo, South Africa.

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

Project Description
The original Makhado project development plan included a 26-month construction phase followed by a four-month ramp-up to achieve a production rate of 5.5-million tonnes a year, with a capital requirement of $281-million.

While CoAL has progressed regulatory matters on the coal project, it has reviewed its development plan and reassessed its strategy, resulting in an amended plan requiring reduced capital expenditure, a shorter construction period and earlier-than-planned production.

The Makhado Lite project will produce about 1.7-million tonnes a year of saleable coal, comprising 700 000 t/y to 800 000 t/y of hard coking coal, compared with 2.3-million tonnes a year in the original project plan. Thermal coal production has been revised from 3.2-million tonnes to between 900 000 t/y and one-million tonnes a year. In the original Makhado project plan, about 12.6-million tonnes a year of run-of-mine production was estimated, compared with four-million tonnes in the new development plan.

The life-of-mine plan has been extended from 16 years to 29 years.

CoAL expects that a substantial portion of the hard coking coal produced will be sold locally, with the balance sold on international markets.

Potential Job Creation
Not stated.

Net Present Value/Internal Rate of Return
The net present value of the project has decreased from an estimated $697-million, at an 8% discount rate, to between $135-million and $260-million at a 10% discount rate.

The internal rate of return has increased from 30.1% to between 30% and 50%.

Value
The original Makhado project had an estimated capital expenditure of $406-million. Under the revised development plan, the project is expected to cost between $75-million and $85-million, and allows for the future expansion of mining and production.

Duration
The original Makhado project had a construction period of 26 months. The revised strategy expects that the Makhado Lite project to be built in 12 months.

Latest Developments
None stated.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Not stated.

Contact Details for Project Information
CoAL, tel +27 10 003 8000, fax +27 11 388 8333 or email adminza@coalofafrica.com.