African Energy Resources begins bulk sampling work at Sese Coal Project in Botswana

African Energy Resources (ASX: AFR) has begun bulk sampling work at its 2.7 billion tonne Sese Coal Project in Botswana following a Concept Study in September that confirmed the project's viability.

As part of the Bankable Feasibility study, the AFR has committed to extract a bulk sample of 10,000 tonnes of coal to provide material for ongoing test work.

The earlier Concept Study confirmed an initial; up to 1 million tonnes per annum (Mtpa) operation (Stage 1) can generate cash flows from 2013 and involves selling washed coal into domestic and regional markets.

Local contractor G&S Projects was mobilised to the site in October and has commenced drill and blast operations to deliver the bulk sample in early 2012.

The box‐cut has been sited and designed so that it can be expanded into a development ramp for future mining
operations.

Coal from the bulk sample will be used for a series of large scale tests, including:

- Export trials to test the capacity and freight tariffs using the existing rail/port infrastructure to

- Combustion tests for power station boilers to assist negotiations of coal sales agreements to power station customers

- Confirmation of the washing yields derived from previous testing of slimline drill core samples. This will confirm the product specification ranges of washed coal for sale

- An assessment of the coal’s suitability for coal to liquids processing which if favourable will be followed by a large scale test programme utilising 500 tonnes or more coal

- Samples of coal from the bulk sample will be made available to potential industrial customers to undertake their own testwork.

A stage 2 operation as envisaged through a BFS would refine the technical and commercial evaluation of a mining operation to deliver up to 5 million tonnes per annum.

Background to Sese Project

The Sese Coal project comprises one wholly owned prospecting licence and a number of prospecting licence applications located in northeast Botswana, approximately 50km southwest of the town of Francistown.

The project is situated close to the sealed highway between Francistown and Gaborone and is easily accessible.

Rail, road and power infrastructure is close to the project area.

African Energy discovered a large deposit of thermal coal at Sese in June 2010 and announced an initial resource estimate of 2.73 billion tonnes of coal within Prospecting Licence PL96/2005 (0.5 billion tonnes Indicated Resource and 2.23 billion tones Inferred Resource) in May 2011.

Concept Study Results were positive

Attractive project economics have been forecast and include: Stage 1 (Contractor) OPEX at US$13/ROM tonne and CAPEX at US$46 million; and Stage 2 (Contractor) OPEX at US$10/ROM tone and CAPEX at US$104 million.

The Sese deposit has a number of characteristics ideally suited to low cost open cut mining methods:

- Large continuous seam with a strike‐length of some 35km;
- Thick main seam which averages 14m thick;
- Full seam strip ratios of 1.6:1

Components of the BFS have already commenced, most notably an infill drilling programme to deliver a Measured Resource.