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 eyes up coal export opportunities
South Africa coal developer Strategic Natural Resources (AIM: SNRP) confirmed today that it is making progress in securing revenue avenues for its Elitheni coal mine on the Eastern Cape. Strategic Natural Resources listed on AIM in August 2007 with the ambition of proving up a substantial coal resource at Elitheni.
Since listing, the company has defined 97 million tonnes (44.5 measured, 26.3 indicated, 26.4 inferred) of in-situ coal (52 million tonnes extractable), and substantially increased its land position (37,000 hectares) in the area to define further coal potential. It is worth noting that the current resource sits within only 2,500 hectares. The company has also received an opencast mining permit over a small area of the coal resource. So far, so good.
Looking ahead, the company is now driving ahead on three fronts. First, to expand its land position again and convert a larger portion of its footprint into mining rights – the target is to have 180,000 hectares of prospecting licences in 2009. Second, the company plans to ramp up production, by selling coal into the local market. Third is to secure long term offtake agreements with larger buyers either in South Africa or overseas. The company has a three year ramp up plan to lift production from around 100,000 tonnes in 2009 to 1.5 million tonnes by 2011.
One long term agreement is already in place. Strategic Natural Resources has signed an agreement with fellow AIM company IPSA (AIM:IPSA) to supply coal to a mine-mouth fluidised coal fired power plant near Indwe, but any coal sales are unlikely before 2011, as IPSA needs to build a plant first. The agreement covers 1 million tonnes per annum, with an option to increase this to 5 million tonnes per annum if Strategic Natural Resources can add to its resource and IPSA can complete the required power capacity.
In the meantime the company has turned its attention to supplying both the domestic market and securing offtake agreements with overseas buyers. Today, Strategic Natural Resources confirmed that it had established 20 small depots in the local area to sell coal for heating in the winter. A further 80 depots are planned. Negotiations and tests are also been carried out with other potential offtakers, including a number of clay brickyards in the South Eastern Cape region. Also in the domestic market, Strategic Natural Resources has entered into a strategic alliance with local contractors to convert existing boilers into fluidised bed boilers that can use Elitheni’s coal. Strategic Natural Resources reckons there are around 300 boilers in the Western and Eastern Cape regions that could save up to 20% per annum in fuel costs by making the switch.
Far more material, Strategic Natural Resources has discovered that its metallurgical quality coal could be exported through a port at East London, via a rail link that passes through its property. Negotiations are underway with possible customers. Additionally, the company is negotiating to supply 120,000 tonnes per annum for new domestic industrial customers.
Aside from ongoing coal negotiations and production ramp-up, the company also announced that it has agreed to an extension of the deadline for outstanding money due from its Black Economic Empowerment Partner, Vuwa, to 31 May 2009.
