www.snrplc.co.uk
SNR intends to develop, own and manage natural resource extraction enterprises in southern Africa. SNR will concentrate, initially, on managing the development of and the investment in the Elitheni Mine, in the Gubahoek/Macubeni area of the Eastern Cape. Further opportunities both in South Africa itself and elsewhere in the southern part of the continent will be followed up as they arise. The company’s main country of operation is the Republic of South Africa.
Strategic Natural Resources off-take deal a vindication of Elitheni coal mine
Strategic Natural Resources (LON:SNRP) received vindication, if it were needed, of its Elitheni coal project in South Africa’s Eastern Cape as it revealed it had signed an off-take deal with Trasteel International.
The agreement with the Lugano, Switzerland, based metals and commodities trader is for an initial 2 million tonnes of coal. However Trasteel has also been granted the right of first refusal on the next 2 million tonnes.
First shipments are expected to begin in June next year, and the company reckons it will ship around 500,000 tonnes in the first 12 months of operation.
SNR points out that this initial order represents less than one per cent of the already proven 150 million tonne Elitheni coal deposit.
It means the group will be looking to negotiate further sale agreements, not only utilising its existing proven deposits but also from further coal discoveries on its property which it anticipates.
Last month it said it had earmarked US$2.5 million for a drilling exploration programme designed at increasing its resource base.
Elitheni’s current 150 million tonne measured, indicated and inferred resource is based on just three 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.
The new campaign is planned to increase the mineable resources available in the Phase 1 and 2 areas, the central parts of SNR’s acreage.
It will also explore for coal in the Phase 3 area, in order to verify an earlier report of possible coking coal deposits there, and explore for coal in the Phase 4 area.
The new programme will also start drilling and exploration of the large Phase 5 area, west of the company's current operations, in preparation of a possible export feasibility study which SNR aims to commence over this area in 2012.
The coal from Elitheni will be shipped through the Port of East London in the Eastern Cape of South Africa.
SNRP is in advanced discussions with Transnet Port Terminals, the South African national ports authority and operator, about building coal handling facilities there.
Coal will be delivered using a combination of road and rail transport, given the close proximity of the mine to the port.
Discussions are underway with Transnet Freight Rail, the national rail operator, about upgrading the rail link between the Elitheni project and East London.
Chief executive David Nel said: "We have worked hard over the course of many months to find the right partner with which to develop the Elitheni coal mine and to commence coal exports and we are delighted to have signed an agreement with such a well respected company as Trasteel.
“We are also very thankful for the roles played by LCB and Ports of Africa in this transaction.
“We have a major coal resource and are confident that this will be the start of a fruitful relationship with Trasteel and the commencement of many years of exporting coal, firstly through the Port of East London and in the near future through the new deep-water port of Coega.
“We are committed to delivering against this off-take agreement with the same passion and determination to succeed that has carried the company thus far, values we know Trasteel share."
