Name and Location
Waterberg coal project (WCP), Limpopo, South Africa.

Client
Waterberg Coal Joint Venture Partners (WCJVP), comprising Firestone Energy and Sekoko Resources.

In April 2013, ASX-listed Waterberg Coal Company (WCC) acquired 45.88%, or 1.63-billion shares, of dual-listed Firestone Energy, resulting in WCC acquiring 32.36% of the coal producer. WCC also acquired 480-million Firestone shares from its 25%-owned subsidiary Sekoko Resources, separately from the takeover offer, representing a further 13.52% interest in Firestone.

Project Description
The project consists of eight farms, in the Waterberg coalfield, totalling 7 979 ha. The identified area over the Smitspan farm (first-phase base case) indicates a mine layout covering 507 ha, extending for 3.5 km from east to west and for 1.8 km from north to south. The project partners have previously reported a Joint Ore Reserves Committee-compliant resource statement of 3.88-billion tonnes of coal, of which 2.07-billion tonnes are in the measured category.

The project proposes the development of an opencast mining operation to produce ten-million tonnes a year of coal for Eskom for an initial term of 30 years, pursuant to the memorandum of understanding (MoU) that the WCJVP entered into with Eskom in March 2012.

The project includes the design, manufacture, supply, delivery, assembly, installation and commissioning of a 22-million-tonne-a-year coal-handling and preparation plant in a phased approach within an engineering, procurement and construction framework.

Value
The project is estimated at R10-billion.

Duration
First coal is expected by the end of 2015.

Latest Developments
A definitive feasibility study (DFS) on the WCC’s standalone export project has been commissioned, as discussions for the funding of the project get under way.

WCC, which is still in talks with State-owned power utility Eskom to resolve the outstanding requirements to convert the WCP’s offtake MoU into a coal supply agreement (CSA), says the DFS will be completed by the Snowden Group by mid-December.

The group is also in “advanced discussions” with several prospective undisclosed buyers of the export product, with an announcement regarding this matter expected before the end of November.

Further, an agreement with Transnet Freight Rail for the transport of the export product from the Waterberg to Richards Bay Coal Terminal is expected to be concluded in November.

Meanwhile, WCC expects to resolve all outstanding requirements to secure the CSA, including coal specification finalisation, final pricing, delivery dates and providing Eskom with a satisfactory due diligence report on the DFS, early in 2015.

Key Contracts and Suppliers
SRK Consulting (feasibility study); Coffey Mining (geotechnical investigation) and Ardbel, an ELB Engineering Services and DRA Group joint venture (preliminary design and basic engineering works).

On Budget and on Time?
Not stated.

Contact Details for Project Information
WCC, tel +27 10 594 2240, fax +27 10 594 2253 or email info@waterbergcoal.net.
SRK Consulting, tel +27 11 441 1111, fax +27 11 880 8086 or email johannesburg@srk.co.za.
Coffey Mining, tel +27 11 679 3331, fax +27 11 679 3272 or email Coffey.Africa@coffey.com.
Ardbel, tel +27 11 032 1150 or email info@ardbel.com.