Minergy Limited, the coal mining and trading company which owns 100 % of the 390-Mt Masama coal project in the Mmamabula coalfield in Botswana, reports that the new mine will reach steady-state production in September this year.
The Masama processing plant (photo: Philip Mostert Photography).
“We have come such a long way and are pleased with developments at the mine site,” commented Morné du Plessis, Minergy’s CEO. “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.”
Minergy, which is listed on the Botswana Stock Exchange (BSE), previously reported in its interim results announcement on 29 March 2019 that mine infrastructure, including extensive civil work, power reticulation, water reticulation systems, access roads, weighbridge offices and workshops, had been completed. The mine boxcut was ahead of schedule.
In terms of the mining operation, in excess of 2,2 million m3 of overburden material was moved by July 2019 by the opencast mining contractor, Jarcon Opencast Mining.
“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,” said du Plessis. He added that additions to the plant were ongoing to improve efficiencies and provide consistency in both product quality and sizing.
“The Masama coal project has an excellent quality coal product within sustainable coal seams and, as such, has received significant interest from regional companies. Minergy has successfully moved product to South Africa and Namibia,” he said. The smaller Botswana market is also being targeted and Minergy believes it will be able to provide competitive pricing.
As a norm, the customer will be responsible for logistics of the coal with Minergy focusing on its core strength, which is the marketing of coal. “From our interactions with sub-contractors moving coal on behalf of our customers, they have experienced smooth border transitions. The logistics companies are highly efficient and ensure all paperwork is in place and their agents do pre-clearance at their offices at the border posts,” stated du Plessis.
The company is not currently focused on supplying coal to the power generation market but points out that a business case is developing with the shortfall of coal experienced by the South African power utility, Eskom. “We have certain coal qualities that are perfect for power producers and this can easily be accessed and utilised in the future,” du Plessis explained.
Minergy has extracted roughly 39 000 tons of coal to date. 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 (ROM) per month. The same quantities will be put through the washing plant and this should result in saleable coal of between 70 000 to 80 000 tons, increasing to 100 000 tons per month next year.
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.
Masama requires very little additional capex. “The big-ticket items have been spent,” said du Plessis. “These included ensuring the mine had power and water, and that the mine boxcut and the processing plant were established. For the next six months all that we foresee is spend on water, new road construction and the maintenance of access and surrounding roads to the mine.”
Despite extremely difficult access to funding, Minergy has successfully raised P90 million from the Botswana Development Corporation (BDC) as well as from the Minerals Development Corporation of Botswana (MDCB). The funding is sufficient to bring the mine into production.
Initial funding includes bridging finance provided by both parties amounting to P70 million for a period of six months. This will be refinanced through long-term agreements with both parties. All the necessary regulatory approvals are in place and agreements have been signed with all paperwork completed.
Thus far, project execution has proceeded very safely and there have been no reportable incidents since mine development began in September 2018. Focus is placed on near-misses and safety protocols are enforced on site.
Minergy directly and indirectly employs in excess of 250 people, 92 % of whom are local citizens. Approximately one-third are from the local Kweneng district.
The village of Medie was due to get electricity in 2023/24. As part of Minergy’s corporate and social investment programme, it has paid for electricity connectivity to the village and will continue to provide support in critical areas such as the clinic, kgotla and the school.
“We have a remarkable team in place who share core objectives. These include that Minergy must in the medium term ensure stable cash flows, productivity, quality and product. There is blue sky opportunity for Minergy to increase production and supply the export market, but the building of the Lephalale rail link and export price are two factors that are outside of our control. It’s prudent for us to focus on our strengths and ensure that customers are well serviced and receive quality coal,” said du Plessis.”
Du Plessis said that he and the project team had “enormous gratitude” for the effort and vision shown by the retiring CEO of Minergy, Andre Boje. The listing of Minergy on the Alternative Investment Market (AIM) of the London Stock Exchange remains a goal and Boje will continue to be a part of the team tasked with ensuring the listing is successful.
