Minergy, the Botswana Stock Exchange listed mining company, has expressed optimism regarding its coal mining project in Masama- 130 kilometres (81 mi) north of Gaborone, saying 2018 coal supply trends and prices show that it is feasible to continue developing the project and start coal mining by July 2018.
In its updated market report, the company’s management say there is progress in their license application and expect to be awarded mining rights by the third quarter of 2018.
According to Minergy Director Mokwena Morulane it recently emerged that the envisaged coal mine could produce 100 000 tons of coal per month for sale and production could be expanded to reach 200 000 tons per month. “After awarding of the mining license, Minergy plans to on monthly basis mine 250 000 tons of raw coal for processing through the washing plant by September 2018 and finally produce 100 000 tons per month,” said Morulane.
Morulane indicated that data shows that coal prices at international and regional level continue to be favourable and this could encourage expansion in production. “Due to the current favourable coal pricing and product shortages, Minergy has had numerous approaches to enter into off-take agreements with both regional end users and international coal traders which could elevate the required saleable product to in excess of 200 000 tons per month,” he said.
Recent figures from the company’s updated market report show that the coal project could benefit from increasing coal prices which stood at over 90 percent since 2016. The report stated that during February 2019, physical coal shipments from Richards Bay Coal Terminal in South Africa traded at $US98 per ton, up 90% from the 2016 lows and explained that the increase in prices is driven by the lack of investment in new coal projects, China cutting back some 500 million tons per annum in production and increased demand for coal from new coal fired plants. According to the report, the increasing prices and favorable market conditions could ensure that Minergy coal project in Botswana becomes a sustainable project creating job opportunities and contribute to mining royalties.
Giving an update on the project, Minergy CEO Andre Boje said the process of securing the mining license for the project is at an advanced stage; “The required documentation for the award of the license has been reviewed by the various departments and is awaiting final approval. We have had excellent engagement with and assistance from the Botswana government at all levels and this has given us comfort that the license should be awarded by Q3 2018.” He stated that the process to identify and appoint a suitable mining contractor is at an advanced stage and added that after the awarding of the mining license and appointment of mining contractor, mining operations should then commence during July 2018.
Commenting on availability of cash reserves for mining operations, the CEO said capital partners and major partners remain fully committed and supportive of the project and the associated business plan going forward. He indicated that in its bid to raise more money to fund the coal project Minergy is preparing to list in London. “Extensive work and preparation has taken place for a second listing on the London based Alternative Investment Market (“AIM”). The required London based broker has been appointed and we are in the process of appointing the accountants and lawyers. However, a final decision regarding the second listing will only be made once Minergy has formally tested the investment appetite. The listing on AIM is planned for the end of 2018.”
The CEO said overall the company is pleased with the progress made regarding the project and is excited about the road ahead and what can be achieved.