Coal news and updates

 

African Energy Resources (ASX:AFR) will lift its total coal resources to a massive 6.2 billion tonnes by acquiring the 2.4 billion tonne Mmamabula West Coal Project in south-east Botswana.

 

For a price of $2.5 million in cash, African Energy gains an Indicated resource at Mmamabula, which could form the basis of a standalone underground export coal mine.

 

The Mmamabula West Coal Project is located 100 kilometres north of Gaborone, and 50 kilometres west of the railway line between Gaborone and Francistown.

 

It contains 892 million tonnes of Indicated Resource and 1,541Mt of Inferred Resource at an average in-situ raw CV of 4,800kcal/kg (20.1 MJ/kg).

 

Significantly, the majority of the coal occurs in two coal seams which are 4-6 metres thick and 100-150 metres below surface.

 

A preferred area of approximately 25 square kilometres within the Indicated Resource contains higher quality coal that can produce a 6,100 kcal/kg export product at yields of 75%.

 

African Energy will pay Asenjo Energy an initial US$1 million to Asenjo Energy with valid transfer of title of the prospecting licence. A further US$1.5 million will be paid once a retention licence has been granted over the project.

 

Drilling at Mmamabula West

 

Mmamabula West has been defined by 87 holes drilled by Asenjo between 2008 and 2011, plus 52 historical drill holes drilled before 2006. 

 

The deposit contains three coal seams:

 

- K-Seam: 5.7m thick (0.5m to 9m), 47-122m deep (average 105m)

- A-Seam: 4.6m thick (0.5m to 6.5m), 70-210m deep (average 130m)

- E-Seam: 1.5m thick (0.5m to 3.2m), 85-230m deep (average 155m)

 

Testwork at Mmamabula West

 

Washability test-work was also completed on 480 core samples from across the project by Inspectorate M&L (Pty) Ltd of Middleburg, South Africa. 

 

Gemecs generated cumulative wash tables for each seam using the industry standard Micromine GBIS cumulative module. The washability results generally indicate that the coal quality can be materially improved through washing.

 

Detailed inspection of the drilling information, proximate analyses and washability tables has led to the identification of a coherent 25 square kilometre area (defined by 21 drill holes) within the indicated resource that has higher quality coal capable of producing high CV products at high yields.

 

Analysis

 

The acquisition of Mmamabula West represents an attractive addition to African Energy’s overall coal resource in Botswana given that the $2.5 million cost means the company paid about a tenth of a cent for every tonne of coal resource.

 

This is a bargain for a project that could mature into a standalone underground export coal mine.

 

It also compares well with its acquisition of the 1.3 billion tonne Mmamanstwe coal project from Aviva Corporation (ASX:AVA) for $3.5 million, or $0.0027 per tonne of coal.

 

The acquisition also highlights the company’s focus on its coal projects in Botswana, which have multiple opportunities for commercialisation.

 

Source: Source: www.proactiveinvestors.com.au