PERTH (miningweekly.com) – Diversified junior Walkabout Resources is hoping to complete a prefeasibility study (PFS) on its Takatokwane coal project, in Botswana, by mid-2014.

Last month, the Perth-based company signed a memorandum of understanding (MoU) with technology firm Coalswana to complete an integrated PFS and bankable feasibility study (BFS) for Takatokwane.

The study will not only incorporate an underground mining operation at Takatokwane, but will also look at the possibility of developing a coal-to-liquids (CTL) beneficiation plant at site.

Under the terms of the MoU, Coalswana will fund the integrated studies and the mining licence application, and in return, Walkabout will issue the London-based firm with a five-year convertible note.

Walkabout MD Allan Mulligan told Mining Weekly Online on Wednesday that the agreement with Coalswana not only removed the PFS costs from Walkabout’s accounts, but also de-risked the project and brought a new marketing avenue for the Takatokwane project.

The integrated development would see Walkabout investing between A$40-million and A$60-million to develop an underground mining operation at Takatokwane, capable of supporting the CTL plant being built, and funded, by Coalswana.

The underground mine would also have the capacity to export between 1-million and 1.5-million tonnes a year of coal to South Africa.

“The coal-to-liquids plant uses not only primary product, but also middling product, which we would consider our waste pile of lower quality coal. So developing an initial five-million-tonne-a-year operation could supply both the CTL plant and an export operation,” Mulligan said.

He added that Walkabout was currently contemplating a life-of-mine offtake agreement with Coalswana, and added that the company had not closed the door on potentially owning an equity share in the CTL plant.

Once the integrated PFS had been completed, Coalswana would conduct its own BFS on the proposed CTL plant, while Walkabout’s focus would remain on the underground operation.

“The bankable feasibility studies will be conducted if both developments are found to be viable. And if only one proves viable, then we will focus on that one,” said Mulligan.

In the longer term, the Takatokwane operation could be developed into a multi-mine project delivering some 20-million tonnes of coal a year, and Mulligan said that the major markets for this amount of product would likely be China or India.

The development of the larger scale operation, which would consist of opencast mines, was dependent on the development of a suitable rail line from Botswana to Namibia.

“We need a coordinated industry response [to establish this rail line], which we as Walkabout will be driving from next year. We will be pulling in other Australian explorers in the region and putting pressure on local governments and funding organisations to get this rail line built,” Mulligan added.

Walkabout has Botswana’s largest coal asset, holding some 6.8-billion tonnes of inferred resource and 748-million tonnes of indicated resource.