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Beacon Hill Resources is an AIM listed resources company that is focussed on building a portfolio of near term production projects in commodities relating to the steel production industry. Beacon Hill has two key assets that provide the group with exposure to the steel production industry – Minas Moatize which is currently the only operating coal mine in the globally significant coking coal region of the Tete Province in northern Mozambique and Tasmania Magnesite, a large magnesite deposit in northern Tasmania, Australia.
Beacon Hill Resources says feasibility study demonstrates Mozambique mine's "compelling economics"
Beacon Hill Resources (LON:BHR) this morning unveiled its definitive feasibility study on the Minas Moatize, which it said demonstrates the “compelling economics” of the Mozambique coal project.
Independent consultants TWP Australia based its financial modelling on a 4 million tonne a year run of mine operation producing 2.2 million tonnes of saleable coking and thermal coal.
This generated a net present value of US$662 million and an internal rate of return of 79.5 per cent.
The mine life will be 11.5 years, and the capital costs are estimated at US$166 million, or just short of US$18 million using the “build, own, operate” blue-print where a contractor assumes the expense of items such as the washing plant.
The free-on-board cost of producing the coal will be US$58.5 a tonne.
Beacon Hill chairman Justin Lewis said: “We are very pleased to publish the results of the DFS for the Minas Moatize Expansion project, which provides independent confirmation that the project will support a technically and economically robust coal mine with a mine life of eleven-and-a-half years.”
Minas Moatize has a JORC mineable reserve of 42.65 million tonnes, including a marketable reserve of 23.46 million tonnes. At least 8.72 million will be top quality coking coal
The first shipments of thermal coal departed the port of Beira in December, while the group will start to export hard coking coal this quarter.
The output from Minas Moatize, which is in the Tete Province of northern Mozambique, is primarily sold to India, where the smaller type of ship that uses port of Beira is ideal.
The group's first shipment of 10,650 tonnes of thermal coal from Minas Moatize was trucked to Beira ahead of being shipped. Longer term, the group's intention is to utilise the Sena rail line.
Minas Moatize is a member of Taskforce One, which together with VALE, Rio Tinto and government agency CFM, is finalising terms of reference to complete the refurbishment of the Sena rail line to an initial capacity of 6.5 million tonnes a year in mid-2012 and then to a fully operational capacity of 12 million tonnes later in the year.
Beacon Hill recently revised its offtake agreement with partner Global Coke, which will now take 600,000 tonnes per year instead of all of the coking output from Minas Moatize.
