AMN - BOTSWANA: African Energy to develop Mmamabula

African Energy Resources has executed a non‐binding Term Sheet with a South African investment group (the developer) to develop an integrated coal mine and thermal power station at its Mmamabula West power project in Botswana.

The material terms and conditions of the Term Sheet are:

- African Energy has granted the developer a three‐month exclusive period during which the parties will negotiate the terms of binding documentation for a Joint Development Agreement and such other ancillary documents as may be required.

- The developer must complete Due Diligence to its satisfaction during the period of exclusivity

- The terms of the Term Sheet are confidential and must be kept confidential by both parties.

The 2400 million tonnes Mmamabula West export coal project was acquired in late 2013 on the basis of its large size and export quality coal. It comprises two 4-6 metre thick coal seams, with the upper K-Seam averaging 105 metre depth below surface and the lower A-seam 130 metre depth. A Prefeasibility Study for an underground mine based on a 200 million tonne portion of the A-Seam within the Indicated Resource has been completed.

The study evaluated a 4.4 million tonnes/year ROM operation producing up to 3 million tonnes/year of 6200 kcal/kg export coal over a 20-year mine life. The study envisaged industry standard bord-and-pillar extraction of the best quality section of the A-Seam using a fleet of up to five continuous miner sections with conventional coal processing by dense media separation.

The initial capital cost estimate was $113 million for an owner operated mine and processing plant, and an estimated ROM operating cost of $17/tonne.

http://africanenergyresources.com

News courtesy of International Mining