Name and Location
Minas Moatize coal expansion project, Tete, Mozambique.

Client
Beacon Hill Resources, through its subsidiary, Minas Moatize.

Project Description
Minas Moatize has a Joint Ore Reserves Committee-compliant resource of 86.8-million tons.

The project proposes to develop a large-scale openpit mine, which will extract and process about four-million tons a year of run-of-mine (RoM) coal at steady state production and be capable of producing 2.8-million tons of saleable coal a year over 15 years, 30% of which will be coking coal.

Value
Total project capital was estimated at $166-million; however, Beacon Hill has identified a strategy to deliver an estimated $80-million reduction in the proposed capital expenditure (capex) associated with the expansion of Minas Moatize.

Duration
A revised expansion strategy will result in the company achieving plant capacity of 2.8-million tons a year by the end of 2013.

Latest Developments
The ramp-up of export production from Minas Moatize, which is expected to be 500 000 t/y, will be phased in to match the company’s expected rail capacity on the Sena rail line.

Following the $1.1-million upgrade of the Phase 2A 1.8-million-ton-a-year RoM wash plant, which is on target to be commissioned in February, the company’s board has decided to focus its mining activities on high-value coking coal production and shipments.

Coking coal will be transported to the Port of Beira using trucks, until the arrival of rolling stock from South Africa during the second or third quarter of 2013 and the start of the company's rail operations on the Sena line, which is subject to a definitive rail allocation.

Minas Moatize entered into a preliminary heads of agreement on January 15, 2013, to lease five locomotives and 90 rail wagons to bulk transport coal along the Sena rail line.
A revised mining plan suggests that the existing openpit will be mined deeper to access the lower Chipanga seam, which will yield good-quality coking coal sooner than what was envisaged in the previous plan.

Beacon Hill has implemented a strategy for an estimated $80-million reduction in the proposed capex associated with the expansion of Minas Moatize, but which should still enable the company to achieve plant capacity of 2.8-million tons a year by the end of 2013.

The board has decided not to proceed with the Phase 3 plant expansion to four-million tons a year for $150-million, as originally envisaged in the definitive feasibility study, owing to the Phase 2B and 2C upgrades offering materially less capex, taking the RoM wash plant capacity to 2.8-million tons a year for about $16-million.

The optimised scenario increases the life-of-mine from 10.5 years to 15 years, with potential to extend this further.

Meanwhile, a cost-cutting plan has been implemented to materially reduce expatriate labour costs in 2013. The plan will initially result in Beacon Hill closing its Australian office and rationalising the management and finance function to Johannesburg, in South Africa, and Tete, in Mozambique, by March.

Key Contracts and Suppliers
Global Coke (offtake agreement); Tayanna Mozambique (excavation and coal extraction works) and Vitol Coal SA (marketing agreement).

On Budget and on Time?
Yes.

Contact Details for Project Information
Beacon Hill Resources executive chairperson Justin Lewis, tel +61 3 96279910 or email info@bhrplc.com.