Modern Mining September 2019

MINING News

Minergy lines up its first long-term coal contract

months. Minergy says it is confident of signing additional customer contracts in the coming weeks. Minergy also reports that it has engaged a firm of experts to undertake significant technical work to finalise the mine plan to be conducted at Masama. Based on work completed to date, extremely encouraging results are expected. Internal analysis indicates that Masama could have an NPV 10 in the range US$100 million to US$130 million, an IRR of over 100 % and a payback period of less than two years. Minergy stresses, however, that these figures are indicative only and will only be known with accuracy after the con- clusion of the technical review. Key assumptions include a blended average selling price of US$50-55 per ton (this is, however, dependent on product type as well as quality) and cash operating costs of US$4 045 per ton. The company is subject to a 3 % revenue royalty and a 22 % income tax rate. Closure costs for the opencast phase have been accounted for. A coal resource of 386 Mt has been defined in terms of the preliminary work- ings for the project and comprises open-castable and underground mineable resources in the measured, indicated and inferred categories. Open-castable coal reserves are cur- rently in the process of being calculated but ROM coal reserves are likely to range between 55 and 65 Mt, with resultant sale- able coal reserves likely to be in the range of 30 to 40 Mt. Approximately 304 Mt of the total coal resource is considered mineable by underground mining methods and could significantly extend the LOM (cur- rently estimated at 22 years based on open-castable resources). Prior to the open-castable resource being exhausted, a detailed assessment of underground min- ing will take place. In addition, there are also plans to conduct further exploration on the remainder of the prospecting licence, which is substantial and currently totals 352 km 2 . “The team is extremely proud of what has been achieved in a relatively short period of time, not only for Minergy but for the devel- opment of the coal sector in Botswana,” comments Minergy's CEO, Morné du Plessis. “Minergy has pioneered a process that will support the regional industrial demand for coal and, in so doing, benefit the people of Botswana through job opportunities and vital coal skills development.” 

The processing plant at Masama (photo: Philip Mostert Photography).

Coal producer Minergy, listed on the Botswana Stock Exchange, reports that following the successful start-up of min- ing operations at its new Masama coal mine in Botswana, it has exposed the first 340 000 tons of coal, which represents approximately three months of nameplate production. In doing so, it has removed over 2,5 million cubic metres of overburden. Minergy says it is extremely pleased with both the timing and the progress made at Masama, which is transitioning from mine development into a mining operation at full production. First commercial sales are expected this month (September) and the ramp-up of operations is on-track. Currently, the company is mining

110 000 tons per month, resulting in 70 000 – 80 000 tons of saleable coal. The saleable coal target is expected to increase to 100 000 tons per month in early 2020. Several opportunities to sig- nificantly increase production will be assessed going forward. The company is completing the pro- cess to sign its first long-term contract to deliver 120 000 tons of coal per annum to one regional industrial customer, which represents approximately 10 % of esti- mated annual saleable coal. Discussions are underway with a number of other inter- ested regional industrial customers, many of whom have already tested samples of the company’s coal over the past few the mineralisation for the indicated mineral resource is estimated to be continuous from surface to an approximate vertical depth of 150 m, it expects a strong conver- sion of mineral resources to ore reserves upon completion of the DFS, expected in Q4-2019. “The next six months for Graphex will be transformational as we work towards the completion of our DFS and unlocking our US$80 million funding package,” comments Graphex’s MD, Phil Hoskins. “The company is excited to enter the next phase of its jour- ney as it strives to be the producer of choice for coarse flake graphite to the evolving expandable graphite market.” 

Substantial increase in Chilalo indicated resource ASX-listed Graphex Mining has reported a substantial increase in the mineral resource estimate at its Chilalo graphite project, located in south-east Tanzania.

The company recently completed a 22-hole (totalling 2 083 m) infill diamond drilling programme designed to underpin the upcoming Definitive Feasibility Study. Results have successfully delivered a sub- stantial conversion of inferred resources into the indicated mineral resource category, which now stands at 10,3 Mt grading 10,5 % TGC – a 73 % increase in the indicated cat- egory from the previous estimate. Graphex says that given the project’s exceptional economics and the fact that

6  MODERN MINING  September 2019