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 tonnes.

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 produce 2.8-million tonnes 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
Beacon Hill will start full production at its Minas Moatize project in the coming weeks, says CEO Rowan Karstel.

The company started mining and processing operations at Minas Moatize in May, following the completion of the first phase of the operation’s wash plant upgrade.

A total of 153 520 t of RoM coal was mined, with 14 354 t of saleable coal produced. Production at the mine was only active during the final six weeks of the second quarter, ended June.

Karstel says that Beacon Hill will complete the commissioning of the Phase 2A wash plant in the coming weeks. The plant was wet commissioned in May and the ramp-up is progressing well.

Beacon Hill is focusing on the implementation of Phase 2B/2C for the first half of 2014, subject to bank or vendor funding, to deliver the required volume of 2.8-million tonnes of RoM coal that will reduce unit production costs to that of a Tier 1 global hard coking coal producer.

Beacon Hill is in discussions with various financial institutions to arrange a pre-export senior secured debt facility and/or a mezzanine debt facility to start its Phase 2B/2C capital expenditure.

The company has also entered into negotiations with several equipment providers to submit finance proposals on a build, own, transfer (BOT) basis to fund the Phase 2B/2C wash plant upgrades.

A decision on the funding for Phase 2B/2C is expected shortly after final BOT proposals have been assessed.

Meanwhile, production ramp-up has continued to progress well with the plant producing coking coal and thermal coal to expected specification and qualities. Production ramp-up is expected to increase further during the third quarter of 2013 as commissioning progresses.

Owing to the reduction in hard coking coal prices during the June quarter, inventory is being carefully phased to produce volumes that will coincide with rolling stock availability in the third quarter of the year, Beacon Hill has stated.

The company has prioritised the development of the associated rail infrastructure, most notably the Carbonoc transfer station, in the town of Moatize, in the Tete province, and the Beira transfer station.

The development of the Carbonoc transfer station is advancing on schedule to reach completion at the end of August. However, the transfer station in Beira is currently behind schedule, with the company remaining in dialogue with Mozambique’s Ports and Railways authority regarding interim measures until the final siding location is approved and construction work is completed.

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.