logo-loader

Sable says BFS supports viability of open pit coal mine at Rietkuil

Published: 08:31 11 May 2011 BST

no_picture_pai

Sable Mining (LON:SBLM) says its now in a position to develop its Rietkuil coal mine in South Africa following the completion of a bankable feasibility study.

The BFS supports the viability of an open pit mine capable of producing 2.6 million tonnes per year run of mine over a 30 year life, the firm revealed today.

The Internal rate of return ('IRR') was put at 17.2 percent and the payback period five years. Estimated initial capital expenditure was quoted at South African Rand (ZAR) 906 million.

CEO Andrew Groves said: "The completion of the BFS on the Rietkuil Project is a showcase of the company's ability to deliver a quality project that is now one of a few coal projects in South Africa that is about to be transformed into an operating entity.

"Having been granted a mining licence at Rietkuil in December 2010, we are now in a position to rapidly move forward with development of the mine."

The Rietkuil project has a SAMREC compliant gross in-situ tonnage resource of 156.9 mio/t in the measured and 42 mio/t in the indicated categories.

It lies 80km east of Johannesburg, 8km south of Delmas and is adjacent to Exxaro Resources Limited's Leeuwpan colliery and Kuyasa Mining (Pty) Limited's Delmas colliery - in the Mpumalanga Province.

The study also put the Net present value ('NPV') in real terms of ZAR803.3 mln - at a 7.4 percent discount rate.

Rietkuil is located near established infrastructure including rail and roads linking the mine to the port of Richard's Bay, the report said, added Sable.

Eskom -  South Africa's largest consumer of domestic coal - has a power station 30km from Rietkuil and so there is potential for off-take agreement.

Sable says it is currently in an advanced stage of negotiations with Quattro and Transnet to secure rail and harbour allocation and remains optimistic that these negotiations will be concluded.

The BFS is predicated on selling 50 percent of the saleable product to domestic markets, said Sable.

However, the company is negotiating to obtain sufficient rail and harbour allocation for up to 90 percent of product. As export prices are significantly higher than domestic prices, the increase in rail and harbour allocation, if achieved, should result in a substantial increase to the NPV of the Project, it added.

In addition to Rietkuil's resource, the company has started exploration drilling on the adjacent farm - Matjiesgoedkuil 266IR.  

Initial results indicate similar coal as on the Rietkuil mine. The addition of this resource will extend the 'life of mine' beyond 30 years and further improve the economic fundamentals of the wider Rietkuil project, said the company.

Accesso's landmark deal with SEVEN marks strategic growth in the Saudi Market

Accesso Technology Group PLC (AIM:ACSO, OTC:LOQPF) chief executive Steve Brown joins Proactive's Stephen Gunnion with details of a significant partnership with Saudi Entertainment Ventures (SEVEN). Brown noted the collaboration highlights accesso's strategy to grow its global footprint,...

28 minutes ago