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UPDATE: Beacon Hill Resources new MD targets low cost route to production for Mozambique coal mine

Beacon Hill Resources’ new managing director Rowan Karstel has hit the ground running with a review of the company’s Minas Moatize coal mine in Mozambique that slashes the capital costs involved with the project. The plan is to ramp up production to 1.8mln tonnes a year by January and to 2.8mln by the end of 2013 with a focus on high-value coking coal initially.

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Beacon Hill Resources’ (LON:BHR) new managing director Rowan Karstel has hit the ground running with a review of the company’s Minas Moatize coal mine in Mozambique that slashes the capital costs involved with project.

The plan is to ramp up production to 1.8mln tonnes a year by January and to 2.8mln by the end of 2013 with a focus on high-value coking coal initially.

The cost of getting to this level of output are estimated to be in the order US$16mln. Plans to extend production to 4mln tonnes a year, which would have cost US$150mln, have been shelved.

The option remains if the group can partner with a nearby property to extend the mine’s life.

Separately, Beacon Hill said remains confident of securing its allocation on the rail route to the main port of Beira by the end of January, and has tentatively agreed a deal to lease rolling stock.

“This is a good move on the part of Beacon Hill – using as much capital as they have to do phased expansion into higher value coking coal rather than just targeting an unaffordable expansion to four million tonnes a year,” said City broker SP Angel in a note to clients.

“Securing the rail allocation will be a good catalyst to realising value from the shipment of coking coal. It looks as if Renaissance Capital their largest shareholder intends to keep their holding so the share overhang should be removed.

“At these levels the share price is discounting very little good news and offer upside if the new management team manage to execute their plans.”

At 12.20, the shares were down 0.25 pence at 3.2 pence.


 

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