Minergy Ltd (BSE:MIN) has now removed over 2.2mln cubic metres of overburden at the 390mln tonne Masama coal project in Botswana, with production now getting underway in earnest.
The company is gearing up for a listing on the Aim market of the London stock exchange.
“We have come such a long way and are pleased with developments at the mine site,” said Morné du Plessis, Minergy’s chief executive.
“We are extremely excited about the future of the project, our ability to supply coal into the region, the highly experienced team responsible for executing the plan, as well as our capacity to contribute towards a viable coal sector in Botswana.”
Mine infrastructure, including extensive civil work, power reticulation, water reticulation systems, access roads, weighbridges offices and workshops was completed earlier this year, and the mine box cut was ahead of schedule.
“During early July 2019, the plant had successfully passed both electricity connectivity and leak tests and we are pleased to report that it is now fully operational, producing saleable coal,” du Plessis added.
Plant upgrades are ongoing to improve efficiencies and provide consistency in both product quality and sizing.
To date Minergy has extracted roughly 39,000 tons of coal. In excess of 340,000 tons are exposed in the pit, which only needs to be blasted and put through the plant. This equates to roughly three months of feedstock.
According to the mine plans, from August this year it is envisaged that Minergy will be mining 110,000 tons run of mine per month. The same quantities will be put through the washing plant and this should result in saleable coal of between 70,000 and 80,000, increasing to 100,000 tons per month next year.
It is envisaged that a steady state of operations will be reached in September 2019.
Demand for the product is high as a result of the short supply of coal specifically into the South African industrial market. It is believed that South African electricity generator Eskom will suffer a shortfall in coal supply of 470 million tons by 2030. Large players in the sector, Anglo American and South 32, are respectively withdrawing from the coal sector and disposing of their coal assets, meaning the supply will tighten even more.
Minergy is currently exploring various options for offtake, ranging from longer-term agreements for the finer duff product to spot deals for the bigger fractions.
The company has recently raised P90mln from the Botswana Development Corporation as well as from the Minerals Development Corporation of Botswana. The funding is sufficient to bring the mine into production.