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WCP partners review capex, secure water supply agreement

3rd August 2015

By: Megan van Wyngaardt

Creamer Media Contributing Editor Online

  

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JOHANNESBURG (miningweekly.com) – JSE-listed Firestone Energy is conducting an optimisation study to review its joint venture Waterberg Coal Project’s (WCP’s) capital requirements, to enhance the viability of the four-million-ton-a-year thermal coal project.

The WCP partners – Firestone and ASX-listed Waterberg Coal – were confident that the optimisation process would derive positive outcomes, resulting in considerable reductions in capital funding requirements for the project, located in South Africa’s Limpopo province.

The company also completed a definitive feasibility study for the proposed development of an export project mine, encompassing the optimisation study, which included consultation with world-class plant designers and competitive contract vendors for the mining and  processing facilities and services.

During the quarter ended June 30, the WCP partners and their consultants revised the original washing process plans to enable production of a higher-quality coal suitable for the export market.

Additionally, the optimised plant design allowed flexibility for production of a higher-quality power station feed product.  This power station product would be stockpiled during the export-grade coal mining phase until the potential independent power production (IPP) platform is completed. 

Use of this product as IPP feed would result in optimal resource use and a barren waste dump.

The WCP partners also started negotiations with experienced processing and services providers for a build-own-operate (BOO) dual-module plant, each with a 550 t/h capacity. The proposed plant design configured a two-stage wash process providing greater flexibility in product quality output. 

“The advantage of such a design is clearly an ability to optimise a given product output mix to meet a range of commercial coal requirements including export quality, IPP platform feedstock and Eskom-specification product from the one plant,” the company said in a statement. 

Firestone was confident that adopting a BOO strategy, in conjunction with experienced operators, would significantly reduce upfront capital requirements and provide for a swift progression to mining and production. This was expected to be completed by September.

Meanwhile, the partners were also in talk with a number of parties for the award of the mining contract. “The bidding process progressed to a point where we have indicative pricing on a rand per run-of-mine ton, which is within the  parameters of the WCP partners' financial modelling and with the WCP partners' costings in the DFS,” it said. 

PAARL WATER TREATMENT PLANT
Meanwhile, the WCP partners had, through Sekoko Coal, entered into an agreement with the Lephalale Municipal Council to take over the management and operation of the 10-million-litre-a-day Paarl wastewater treatment plant.

In return, WCP would have access to treated water from the plant for 30 years, with the option to extend the agreement by a further term.

The deal would provide WCP with sufficient water for the proposed export development, as well as Stage 1 of its proposed IPP development.

The export project was expected to start up towards the end of the fourth quarter.

Edited by Chanel de Bruyn
Creamer Media Senior Deputy Editor Online

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