African Energy expands Botswana coal portfolio
Mbongeni Mguni | Thursday October 17, 2013 15:28
On Tuesday, the Botswana Stock Exchange-listed (BSE) announced that it had executed a binding sale agreement to acquire the 2.4 billion tonne Mmamabula West Coal Project from Asenjo Energy, a joint venture comprising South African and Australian investors.
The latest deal will take African Energy Resources' (AFR) portfolio to an estimated 6.2 billion tonnes across three locations along Botswana's eastern coalfields. The deal also means Asenjo's local portfolio now consists of the 2.7 billion Mmamabula East lease and the 1.3 billion tonne Dukwe project which has progressed past pre-feasibility stage. AFR officials said the listed company had conditionally agreed on a cash consideration of US$2.5 million (P22 million) to take over Asenjo's prospecting licence PL65/2005 also known as Mmamabula West.
'African Energy will pay an initial US$1 million to Asenjo once the transfer of title of the relevant prospecting licence has been approved, and a further USD $1.5 million once a retention licence has been granted over the project,' an official said in an announcement.
Other conditions are that the deal could terminate if written confirmation of the title transfer's approval is not received from the Minister of Minerals, Energy and Water Resources by 31 December 2013. Once the transfer is complete, AFR plans to submit an application for a retention licence over the lease area by March 30, 2014. According to the Mines and Minerals Act, a retention licence is applied for and received when an applicant is interested in exploiting the mineral discovered during the prospecting licence period but cannot mine it economically in the present situation.
AFR officials said available data identified a 25 square kilometre preferred area within the new lease containing higher quality coal capable of producing a 6,100 kilocalories per kilogramme at a yield of 75%.
'African Energy believes that this preferred area from within the indicated resource could form the basis of a stand-alone underground export coal mine,' officials said.
'Further, more detailed work, including infill drilling, coal processing studies, mining studies and financial modelling are required to validate this.' African Energy Resources is one of the joint venture bidders for the government's 300 megawatt (MW) greenfield Independent Power Producer tender. The tender requires bidders to identify a fuel source, locate a facility before installing and supplying 300MW of electricity via a Power Purchase Agreement with the Botswana Power Corporation.