African Energy waits for higher coal prices or lower freight costs at Mmamabula
PERTH (miningweekly.com) – A prefeasibility study (PFS) at ASX-listed African Energy’s Mmamabula West coal project, in Botswana, has raised concern about transport costs.
African Energy, which acquired the Mmamabula West project in December for its relatively high in-situ coal quality and perceived potential as a source of export coal, said on Monday that the cost to transport the coal to market would not sustain a profitable operation at current coal prices.
“An increase in the coal price, and/or a reduction in freight costs would have a positive impact on the project economics,” the company said.
Based on the 200-million-tonne indicated resource, the PFS found that the Mmamabula West project could produce up to three-million tonnes a year of 6 200 cal/kg, low ash, low sulpher, export-quality thermal coal, over a mine life of 20 years.
The underground operation would have a run-of-mine (RoM) of about 4.4-million tonnes a year, and would require a capital investment of $113-million for an owner-operated mine and coal handling and processing plant.
The project was estimated to have a RoM operating cost of $17/t, and an estimated product operating cost of $25/t at mine gate.
The coal produced at Mmambula would initially be trucked from the mine stockpiles to a storage and rail loading facility at the nearest rail siding, where it would be loaded onto trains for transport to market.
African Energy said that an export market for the Mmamabula coal existed in South Africa and Asia. The company said that it would continue its discussions on rail and port tariffs with regional operators.
Mmamabula West's resource occurs in three seams, and a global resource of 2.4-billion tonnes has been estimated for the project.
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