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A recent funding and separate coal sales deal sets up the Strategic Natural Resources’ Elitheni coal project through to the start of production.

Family-owned Richardson Capital ploughed £8 million into the group, giving it a 29.9 per cent stake.

"The finalisation of this negotiation is the culmination of many months of work identifying and negotiating with prospective investors,” boss David Nel said recently.

Separately steel supplier and commodity trader Trasteel has agreed to take export coal mined from Elitheni, which is in South Africa’s Eastern Cape, up to an initial 2 million tonnes.

Director Jeremy Metcalfe will talk investors in Dublin and Manchester through the group's prospects as it moves through the development phase whilst maintaining a keen eye on exploration.

A strong end to a topsy-turvy 2011 saw a reserves and production increase by over 35 per cent at Caza Oil & Gas.

Well-funded, it has the financial wherewithal to bankroll its drilling aspirations.
Work is already underway on the Sombrero prospect in Lea County, New Mexico, where it has a 20 per cent stake.

But this is just one of a number of exciting developments this year.
Bringing us bang up to date will be chief executive Mike Ford, who will be in Dublin, London and Manchester.

City firm Collins Stewart rates Vancouver headquartered Rathdowney Resources as the standout stock among junior zinc explorers.

The Euro-centred Canadian firm is developing the Olza project in Southern Poland as well as exploring Ireland, with assets in Cork, Westmeath, Laois, Meath and Galway.

"We view Rathdowney as a technically sound, low risk, relatively low capital intensity zinc play, located in an investor friendly jurisdiction with excellent infrastructure and existing smelting facilities nearby," said Collins Stewart analyst Andrei Kroupnik.

Joining us in Dublin to tell us more about the company and its prospects will be chief executive John Barry.

As one of the early entrants into Morocco, Longreach Oil and Gas already has an impressive landholding in what is quickly becoming a hot-spot for exploration.

In Dublin, Andrew Benitz will share with investors his view on what he believes to be the “last under-explored basin in North Africa”.

Regular attendees will already know plenty about Lydian International's exciting Amulsar gold project in Armenia.

In January, Lydian reported a major resource upgrade at the project. It gave Amulsar a further 700,000 ounces of gold and took total resources to 3.2 million ounces.
After a major drilling programme, the focus now is on developing the project, which is due to go into full production in 2014.

Bringing us up to speed with events will be chief executive Tim Coughlin when he joins us in London.

Beacon Hill Resources is one of AIMs most followed coal stocks. The flagship Minas Moatize operation began coking coal production last month. Located in the Tete region of Mozambique, near major infrastructure projects and iron ore mines, it has a lot of promise.

Justin Lewis will be present in London to talk about the ramp-up and expansion of this exciting project.

West Kirkland Mining has amassed over two dozen exploration properties in Nevada and Ontario as it looks to establish new opportunities in prolific gold districts.

Its announcement earlier this month really caught the eye as it reported  significant gold grades and high-grade silver credits from its TUG deposit in Nevada.

It also said a new high priority target area named "12 Mile" has emerged in the Long Canyon trend.  In 2012, West Kirkland has completed eight holes on the TUG property, extending the deposit a further 200 metres to the northwest.

Knox Henderson will be present in London to talk UK investors through its prospective project portfolio.

Simba Energy has a number of exciting opportunities in Africa and recent industry successes are making investors sit up and take notice of this junior explorer.

Director Hassan Hassan will be presenting in Manchester to tell investors more about the group's projects, which are on the doorstep of high-profile ventures.

Coal miner Strategic Natural Resources (LON:SNRP) today upped the coal reserves estimates at Elitheni in South Africa by a third, but said it had still only explored a fraction of its acreage.

Based on work its phase 1-4 of Elitheni’s drilling areas, the firm said it had identified a further 53 million tonnes of coal resource to take to total to 203 million tonnes.

“The approximate 200 million tonne coal resource we now estimate exists on only 8,500 hectares, which is less than 5% of our total 184,000 hectare rights area, " said chief executive David Nel.

The latest estimate was an internal assessment and the firm has appointed Golder Associates to verify the extra coal, which consisted of 883,000 tonnes of measured resources, 21 million tonnes indicated and 31.8 million tonnes inferred.

Strategic Natural added it has started work on phase exploration at Elitheni, but given the size of the area at 119,000 hectares it has started by marking all outcrops and old shaft entrances.

So far, It has confirmed 14 outcrops and informally accessed shaft entrances on only 5 of the 299 farms in Phase 5.

Strategic Natural has a 74% stake in Elitheni Coal, which last year signed a local deal with government agency IDC to supply 70,000 tonnes of washed coal to a new bio-ethanol plant that will built in South Africa’s Eastern Cape.

The firm has also been involved in discussions with IDC about the funding of Elitheni, 

It said today that it is still involved in active negotiation on the finalisation of its funding programme and is intent on finalising the best deal for all shareholders. 

“The funding programme is being structured in order to allow SNR to deliver the first coal shipments to Trasteel by the middle of 2012. A further update on the funding programme will be made at the appropriate time,” it said.

Steel supplier and commodity trader Trasteel has an agreement to take all coal for export mined from SNR's Elitheni coal mine in the Eastern Cape up to an initial 2 million tonnes.

The first shipment under the contract will be loaded in June 2012, with 500,000 tonnes of coal scheduled to be shipped during the following twelve months.

At the time, Strategic Natural said the order represented less than 1% of the already proven Elitheni coal deposit of 150Mt.

Strategic Natural Resources (LON:SNRP) shares advanced around 6 per cent this morning with the news of a new deal to sell coal from the Elitheni coal mine.

The agreement was signed between SNR’s 74 per cent owned associate Elitheni Coal (Pty) Ltd and a government agency.

Elitheni will supply 70,000 tonnes of coal each year to a bio-ethanol plant that will built in South Africa’s Eastern Cape. The plant will produce its own power fuelled by Elitheni's coal, SNR said.

The shipments are expected to start in 2013.

A government backed finance institution, called the Industrial Development Corporation, is fully funding the bio-ethanol project.

"We are delighted to be a part of this IDC funded project,” said chief executive David Nel. 

“Supplying our coal to local industry is a strategy we as a company have considered to be viable for a long time and it is encouraging to see our endeavours come to fruition after a great deal of interaction with the IDC.”

“Although Elitheni will primarily be an export mine, given its significant reserves, the company will continue to work with local industry with the aim of supplying coal for use in industrial steam and power production." 

The supply agreement has an initial term of 20 years and during this time Elitheni would provide a total of 1.4 million tonnes of coal to the plant.

The coal will be sold at a fixed price, although it will be increased with inflation linked to South Africa's producer price index. 

By 9:10am shares in the firm were up 3.3 per cent at 12.65 pence each after the firm reported results for the six months to the end of August.

In its results statement it said that it had developed a mining plan to that would ensure the most cost-effective way to deliver against its first orders and that opencast workings have been targeted for full production by February 2012, with underground workings to begin in April.

Current negotiations with suppliers of washing plants have led the firm to expect that a 150 tonne per hour module will be commissioned by the end of April, which will allow it more than enough time to begin shipping ‘beneficiated’ (higher grade) coal by June.

The firm has also signed a memorandum of understanding with a private rail company to provide the rail services and rolling stock necessary to begin rail operations to the ports of East London and Coega. In addition to its initial export order, the firm is in discussions with third parties regarding further off-take of coal on a long-term baisis.

Strategic Natural Resources added that around 100 holes have been drilled since May 2011, with more than half of these yielding coal. Drilling is planned to begin in January.

“SNR have made further significant progress in the last six months towards contracting out the mining operations and sourcing plant and equipment,” said David Nel, Strategic Natural Resources’ chief executive officer. “We remain confident we will be able to deliver our first orders on schedule and we anticipate being able to update our competent persons report (CPR) in Q1 of 2012 and will update our resource statement at that time.”

During its first half of its 2012 financial year, the firm made a loss of £975,000 (H1 2011: £470,000).

It formalises a relationship that has existed for “several months” already as the pair teamed up to find potential customers for the output from the Elitheni mine in South Africa.  

SNR said today it is in discussions with potential customers on the terms of an off-take deal, adding that further announcements will be made in due course.

Chief executive David Nel said: "We are delighted to have formalised a partnership with an experienced coal broker.

“This relationship is a result of significant time spent with LCB both in London and South Africa and we have every confidence in LCB's commitment to assist us in selling all tonnage the Elitheni mine can produce through their extensive network of buyers." 

LCB’s experience is extensive as it has brokered global trades of almost 200 million tonnes of coal since its inception in 2005.

Last November Strategic Natural Resources revealed it was in talks with several “large, independent power companies” as part of a concerted push to bring on board major customers for coal from Elitheni. 

The operation, in the Eastern Cape Province of South Africa, is on schedule to begin production towards the end of next year, or early 2012.

Elitheni has a 150 million tonne resource, although SNR has drilled only 3 percent of the project area, which measures 1,800 square kilometres.

By extrapolation the company estimates there could be as much as 3 billion tonnes of coal of which as much as 1 billion could possibly be recovered.

Initially the mine will produce 500,000 tonnes a year, most of which will be earmarked for the export market.

However some will also be mined to satisfy the local industrial market. Eighteen months to three years down the line that figure could be as high as 2.5 million tonnes per annum. 

In the short term the company is targeting what it calls the industrial steam market. 

Most manufacturers of any size in South Africa tend to have their own miniature power stations attached to their factories. 

That’s because businesses in the Republic have learned not to rely on the rather rickety national grid system for their electricity. 

However, these privately-owned coal driven plants tend to be old, inefficient and grimy units that belch black smoke into the atmosphere.

So what SNR has done is quite clever. It has teamed up Thermax Babcock Wilcox and a firm called ACE, which are supplying a new generation of burners to local industry.

The burners will use smokeless Elitheni coal, which will be cheaper and greener than fuel transported hundreds of miles from Witbank in the north of the country.

At the same time the company assessing proposals from the “two to three” large independent power generators I mentioned at the start, though it could be up to another five years before a plant is up and running.

With first major production set to begin in little over a year, the company will need to raise project finance for Elitheni, while negotiations have already begun with contractors vying to run the project.  

Analysts estimate it will cost the comparatively modest sum of £20-£40 million to develop the mine.

South African miner Strategic Natural Resources (AIM:SNRP) said this morning Rapitrade, the company’s black empowerment partner, is taking a bigger stake in the company by acquiring  five million new shares at a price of 21.6 pence each, or around £1.1 million in total.

In the same announcement SNR also revealed it was in advanced discussions with several parties interested in signing off-take agreements to buy coal from SNR’s Elitheni Mine.

The operation, in the Eastern Cape Province, is on schedule to begin production towards the end of next year, or early 2012.

The proceeds from the placing will be used to develop the operation. It takes Rapitrade’s holding in SNR to 13.75 per cent.

Chief executive David Nel said: "We are delighted that Rapitrade, through their appointed nominee, have decided to increase their holding in SNR.  

“The proceeds of the Placing will enable us to continue our development in the Eastern Cape.”  

“We are also pleased to be involved in active discussions with potential off take partners."

Elitheni has a 150 million tonne resource, although SNR has drilled only 3 percent of the project area, which measures 1,800 square kilometres. 

By extrapolation the company estimates there could be as much as 3 billion tonnes of coal of which as much as 1 billion could possibly be recovered.

Initially the mine will produce 500,000 tonnes a year, most of which will be earmarked for the export market. However some will also be mined to satisfy the local industrial market. 

Eighteen months to three years down the line that figure could be as high as 2.5 million tonnes per annum.

With first major production set to begin in little over a year, the company will need to raise project finance for Elitheni, while negotiations have already begun with contractors vying to run the project.  

Analysts estimate it will cost the comparatively modest sum of £20-£40 million to develop the mine.

Ulitorque is claiming a 10 percent stake in SNR’s subsidiary Elitheni Coal Ltd, and this claim was recently upheld by the arbitrator.

SNR’s subsidiary is developing the Elitheni coal mine near Indwe, in the Eastern Cape Province of South Africa.

The loan agreement had an option for Ulitorque to convert the both the principal and the interest into a 10 percent stake in SNR’s subsidiary Elitheni Coal Ltd.

According to Ulitorque, the repayment did not satisfy the conditions set out in the original loan agreement and therefore they requested that they receive the 10 percent equity stake in Elitheni.

This was recently taken to arbitration in South Africa, and the arbitrator upheld Ulitorque’s claim. This was not the outcome SNR had expected.

“The directors of Strategic Natural Resources were advised by legal counsel in South Africa that Ulitorque had limited basis for making such a claim because repayment had been made in accordance with their request for repayment,” the company said.

“The directors believed the claim form Ulitorque to be without foundation.”

SNR added: “The company is currently studying the arbitrator's ruling.  

“Without prejudicing its position the company is discussing a possible settlement with Ulitorque and further announcements will be made in due course.”

Please give investors a brief introduction to Strategic Natural Resources.  And tell us how confident we can be that the company’s coal assets in the Eastern Cape coal fields of South Africa are world class.

The company went on the London Stock Exchange on AIM in August 2007 with the objective of finding a great deal of coal.  And in the intervening period we have drilled an awful lot of holes.  And we have found a tremendous amount of coal.  Yet we’ve only drilled something like 3% of the total area that we have under our control.

Fairly early on we raised our game from a mere 15 million tonnes.  We now stand at about 155 million tonnes.  And by extrapolation it shows that we could be looking at something in the order of 3 billion tonnes of coal. 

Now clearly we’re not going to get all of that out of the ground.  But we may well get a billion tonnes of coal out of the ground in the future.  And I would say that anyone with a 1 billion tonne extractable coal asset has to have a world class asset in their hands.  And I think this is how we’re going to turn out to be.

On July 21st a resource update was announced for Elitheni Coal which is also the first phase of a bankable export feasibility study.  Please talk us through this resource update and what it means for Strategic Natural Resources.

Well as I said in my earlier answer.  We now have about 150 million tonnes of coal.  Of that 150 million tonnes at least 30 million tonnes is considered to be entirely the right type of coal for export. 

And so from that point of view it gives us considerable confidence that the export feasibility study that has been completed does show that we will be able to sell our coal overseas.

What are the local markets for Elitheni’s Coal and how accessible are these markets Jeremy?

Well a number of markets come to light.  Clearly the biggest market of course is to provide coal to independent power companies so that they can make and sell electricity.  South Africa is extremely short of electricity and will remain short over the coming years.  So that is clearly a very big market for us.

We’ve also indentified a number of industrial users who, not being confident that they can always have access to electricity, have established their own burners and boilers to convert coal into electricity and heat and power.  These are targets of ours and we will be supplying a number of those businesses over the coming years with considerable quantities of our coal. 

And we have joined forces with one of the largest boiler makers in the world, Thermax and we will be announcing some fairly major contract details fairly soon.

On 30th September the logistics study on the transporting of coal from Elitheni Coal Mine to the port infrastructure in the Eastern Cape was published.  Which was the second phase of Elitheni Coal’s export feasibility study.  What did this study conclude Jeremy?

Well in order to export you’ve got to have a mining plan that works.  And the mining plan is a very, very complicated business plan involving a huge number of calculations and , a huge number of safety factors.  We have to be absolutely certain that we can get the coal out of the ground at an economic price so that it is then possible to put it on wagons and ship it down to East London where it will be put on to ships and eventually to the ultimate end user.  We will be shipping mainly to countries like India, South Korea and, to some lesser extent, to China.

What are the conclusions of the third and final phase of the Elitheni Coal Export Feasibility Study which focused on washability and market applications?  And what conclusions do you draw from this study?

Professor Falcon who is a renowned coal expert has given her conclusions.  And we’re very pleased to note that our coal quite clearly is not only exportable but it has high metallurgical properties.  In other words it can be used very successfully in the smelting process as a reductant.  It is also suitable for export to countries like Turkey where they use this type of coal for heating purposes.

And of course it is entirely suitable for burning in fluidised bed boilers.  These are the beasts that create massive electricity.  So yes lots of good uses.

What are Strategic Natural Resource’s Black Empowerment arrangements Jeremy?

We have just concluded a phenomenally interesting and very, very good deal with Mr Stone Sizani and his company. Under South African law every mining company has to have a Black Empowerment partner.  They have to have, in total, 26% of the share capital.

Mr Stone Sizani is currently a member of parliament in the South African government.  He’s a highly respected man.  He’s spent time on Robben Island at the same time as Mr Nelson Mandela.  And what’s more, his organisation has put money in to our company.

Not only have we got a man who is highly respected.  But he’s made a very substantial investment.  There aren’t many small AIM companies that can boast such a good result.

What is Strategic Natural Resource’s cash burn?  And what is the company’s financial situation going forward Jeremy? 

Well, we are very economic with the money we spend.  It’s running at about £100,000 per month.  I suppose if you break that down, 80% of that is expended in South Africa  and 20% here in the United Kingdom.  We have a good runway, of probably just over a year at the moment on the existing money that we have in the treasury.  As the Black Empowerment cash comes in then of course that will increase our runway considerably.

Cash is not a problem at the moment although eventually we will need to raise further money.  But mostly by way of a bankable feasibility study ie we’ll raise money through bank debt.  But at the moment we are well funded and we’re going forward as fast as we possibly can.

What can investors expect from Strategic Natural Resources over the next 12 to 18 months?

I suppose the one thing that most people are looking for and indeed we are keen to announce are offtake agreements.  Offtake agreements of a substantial nature for our coal.  For example in a power station an offtake agreement could amount to something in the region of 2 million tonnes of coal a year over a 25 year period.

We will be announcing export offtake agreements ranging from half a million tonnes rising to 2.5 million tonnes per year.  Offtake agreements to supply large factories using commercial boilers using our coal. from 400 to 500 maybe 5,000 tonnes of coal per month for some of them.  And offtake agreements to supply the domestic market generally. 

So there’ll be a lot of announcements coming out.  At the moment I think it’s fair to say that our company is very undervalued for what we have.  And I suspect that as these announcements are made people will begin to realise that Strategic Natural Resources really is a company to be reckoned with.

Who are Strategic Natural Resources’ major shareholders and how are your relationships with them?

Our major shareholder I suppose at the moment is Coal of Africa and it’s very good to have a good commercial coal operator as a share holder with us.  We work together on a number of fronts.

The next biggest shareholders of course are the family of Nel, Barry Nel and his son David through their company Southern Cape Corridor, they’ve got about 15%.  

And then really the rest of the shareholders that aren’t directors are held by a lot of nominee companies.  And it’s sometimes quite difficult to know who they are.  But I think most of them are there, I hope, for the long term.

Do you anticipate any mine reclamation issues or community issues at Elitheni Jeremy? 

None at all is the short answer to that.  We are very well supported by the local community.  The local community I’d like to point out have got an unemployment level, of approximately 98.9%,.This is an absolutely huge level of unemployment. 

So, by bringing this mine in to life and by employing maybe 1,000 to 2,000 people those 2,000 people will generate something like 15,000 other jobs in the local area. 

So the support we are getting from the municipality is absolutely terrific.  And bear in mind this is an adit mine, ie we go in at the side of this mountain and extract the coal straight out on to conveyors into lorries or directly into the power station or into rail trucks, there’s very little reclamation that will be required.

Bear in mind this mine will be active probably for the next 50 to 100 years.  It’s a big mine and it’s going to provide a huge number of benefits for the local people.