Masama Coal Project

The Masama coal project is a 2.8 billion tonne export-quality coal deposit located in the Kweneng and Kgatleng Districts of eastern Botswana.

Feasibility study on the mine development is currently underway and is expected to be completed by the second quarter of 2018. Box-cut mining for the project is anticipated to begin in July 2018 and first coal production is scheduled for September 2018.

The project is anticipated to have a mine life of 100 years and a development cost of BWP200 ($19.2m approximately). It is estimated to produce between 2.4 and 3.5 million tonnes per annum (Mtpa) of coal at a steady rate during the initial 20 years of operation.

Incorporated in the British Virgin Islands, Minergy holds the exclusive right to prospect for coal and coalbed methane at the Botswana project through its subsidiary Minergy Coal.

Masama coal project location

The Masama coal project prospecting licence (PL278/2012) area falls within the Mmamabula Area of the Southern Belt of the Central Kalahari Sub-Basin of Botswana. It is one of only three large and scalable export-focused, opencast projects in the region that are capable of near-term development without relying on domestic power stations.

The project is located approximately 200km south-west of the Morupule coal mine, which is Botswana’s only operating coal mine. It is also in close proximity to the 670Mt Mmamabula South and Central coal projects of Anglo Coal Botswana.

Masama coal project geology

The Masama coal project area is characterised by the presence of coal, coaly mudstone, and sandstone of the Mmamabula Formation of the Ecca Group, which is part of the Karoo Supergroup. The coal resources are shallow and crop to a maximum depth of 130m.

The deposit types of the project display strata-bound coal seams of various thicknesses and quality. The project is modelled as typical tabular and near horizontal, with the coal distribution controlled by topographic or structural highs along with minor faulting and weathering.

The project area comprises five major coal seams and a coal sequence, namely the E Seam, A Seam, A Upper Seam, K Seam, G Seam and A Sequence. The gently dipping coal seams have a thickness of up to 6m.

Coal reserves of Masama

The measured, indicated and inferred coal resources are estimated to be 390Mt. The resources are from the AU Seam, A Seam, and E Seam within the focus area of the west block of the project.

The total resources are estimated to be 82.3Mt from open cast and 307.7Mt from underground mineable coal.

Coal mining and processing

The Masama coal deposit is mineable through both open-cast and underground methods. The open-cast is proposed to be mined using truck and shovel method targeting the E, A and A Upper coal seams.

Shallow underground board and pillar mining method with the help of continuous miners and/or drilling and blasting is proposed for underground operations.

Coal processing will be undertaken using the standard coal industry processing or washing techniques to produce saleable products.

Coal off-take from Masama

Minergy entered a 100% offtake agreement with an international and regional trading house, for which a non-binding term sheet was received in May 2017.

Minergy-owned coal trading company MinSales is responsible for the coal sales and trading.

Financing for Masama coal project

Minergy raised BWP72m (approximately $6.9m) through a private placement and intends to use the proceeds for the development of the Masama coal project.

Infrastructure facilities at Masama

The Masama coal mine is located near existing water, road, rail and power infrastructure. It is situated near the A1 highway and an existing railway line located approximately 40km to the east, which will provide access to potential markets in the region.

Botswana Rail granted approval to Minergy in August 2017 for the construction of a rail siding at Tshele Hills.

Contractors involved

GM Geotechnical Consultants (GM Geotech) prepared the resource estimate and competent persons report for the project.

Coffey Mining conducted an independent valuation of the project in accordance with the SAMVAL CODE 2016 Edition (the South African code for reporting of mineral asset valuation).

Mott MacDonald conducted a concept study for establishing a 300MW mine-mouth power station at the coal project.