Name and Location
Morupule South coal project, Botswana.

Client
Hodges Resources.

Project Description
The Morupule project is located to the south of the operational Morupule colliery, in central east Botswana. The project consists of one prospecting licence – PL121/2010, covering 264.4 km² within the eastern central district of Botswana.

The project has a current measured Joint Ore Reserves Committee-compliant resource of 110-million tonnes and 173-million tonnes in the indicated category and 2.167-million tonnes inferred resources.

A scoping study on the project has proved the economic viability of the project. The study has concluded that the project can be developed through a staged process, with the initial stage supporting an operation for the domestic/regional coal markets and a run-of-mine (RoM) ranging from 1.5-million tonnes to 3-million tonnes a year.

Value
Capital cost estimates for developing a 1.5-million-tonne-a-year operation is A$55.76-million for a contractor-operator model and A$111.1-million for an owner-operator model, which includes contingencies estimated at 30% and engineering, procurement and construction management estimated at 12%.

Duration
Not stated.

Latest Developments
In the quarter ended September 30, 2013, Hodges has reported that it received the initial laboratory analysis results from all the samples submitted from the drilling programme, which was completed earlier in the year over the shallow coal area within the eastern block.

The results are being processed and will be used to update the resource model and the resource estimate, which will bring additional resources from the inferred into the measured and indicated category.

Hodges has further incorporated a special Botswana propriety company (Morupule South Resources) during the quarter. The transfer of title from the joint venture partner to the newly incorporated entity has started. Both parties of the joint venture (JV) will fund their proportional share in the project going forward.

Hodges currently owns 75 % of the company and will continue to manage the project.
The government of Botswana recently closed the expressions of interest to tender for the development of the greenfield 300 MW coal-fired power station from independent power providers (IPP) by 2019. Hodges has been approached by IPPs to secure the fuel supply agreement for this development.

The brownfield 300 MW coal-fired power station tenders from IPPs closed during the previous quarter (April to June 2013), where 13 companies completed and submitted the necessary prequalification documentation. An announcement on the outcome of the prequalification phase is expected to be made by  government soon. Hodges has actively engaged with several of these companies and aims to complete alternative fuel supply agreements for those who meet the tender qualifications in the coming months.

Hodges is considering securing coal supply agreements with various parties to expedite the development of the Morupule South project. It is also aiming to align with an international power development group to fill the current void and future in the regional power markets, especially with the continued issues of South Africa’s power supply decline.

Key Contracts and Suppliers
None stated.

On Budget and on Time?
Too early to state.

Contact Details for Project Information
Hodge Resources, + 61 8 9322 6412, fax +61 8 9322 6398 or email info@hodgesresources.com.au.