JOHANNESBURG (miningweekly.com) – A prefeasibility study (PFS) on the mining portion of Tanzania-focused Kibo Mining’s Mbeya coal-to-power project (MCPP) has outlined potential yearly revenues from coal sales of between $48.4-million and $48.6-million and a yearly profit margin of between $24-million and $27-million, the company said on Wednesday.

Findings from Phase 2, Stage 1 of the mining PFS, which comprised an element of the overarching definitive mining feasibility study (DMFS), further pointed to a return on investment (ROI) of between 595% and 903% and a payback period of between 2.6 and 3.65 years.

The project was assessed for a 28-year mine life, with coal production of 1.48-million tons a year over the life-of-mine.

Applying a real discount rate of 5.5%, the project’s best estimated net present value (NPV) ranged from $211-million to $244-million, Kibo outlined.

All-in cost margin estimates ranged from 49% to 62%, with an internal rate of return of 33.6% to 53.9%.

Using a modified terrace mining method, with overburden removal by means of a “free dig” method, and coal seam and interburden mining by  means of mechanised continuous surface mining method, the PFS identified four alternative mining options for the selected mining method identified, with the project financially feasible for all.

Commenting on the results, Kibo CEO Louis Coetzee said the PFS had surpassed the company’s expectations, confirming the robustness of the Mbeya coal mine as the mining component of the MCPP.

“The all-in cost margin and NPV ranges are particularly impressive given the very prudent assumptions applied.  This is evidenced by the use of coal pricing significantly below the current market price, further reflecting the robust economics of this project.

“This is also reflected  in the very strong ROI figures,” he asserted.

He added that it was significant that the study had proved the continuous surface miner and “free digging” to be a viable option, which improved mining efficiency and effectiveness.

“The most important impact of these two aspects are, however, not of a technical nature, but environmental. The use of the continuous surface miner makes any washing of coal unnecessary, while ‘free digging’ allows total avoidance of any explosives and blasting.

“It is specifically the avoidance of any washing that frees the project of a very expensive and onerous environmental liability. The fact that we also do not  have to do any river diversion is a further significant positive environmental impact,” he concluded.