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Firestone moves closer to Eskom supply agreement

7th June 2013

By: Natalie Greve

Creamer Media Contributing Editor Online

  

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Dual-listed Firestone Energy has published an interim resource statement for its joint venture (JV) Waterberg coal project, where production is set to start in the second half of 2015.

Drilling results have confirmed the gross tons in situ to be 1.09-billion tons and the combined indicated and inferred resource to be 92.31-million tons.

The interim resource statement covers two properties of the four farms held by Sekoko Coal, with which Firestone shareholder Ariona has a formal share sale and purchase agreement.

The project’s technical team has confirmed that the bankable feasibility study (BFS) is now scheduled for completion by the end of June.

The delivery of the BFS is one of the key conditions required to convert an agreement between Firestone and Eskom – which outlines the supply of ten-million tonnes a year to the parastatal – from a memorandum of under-standing to a coal supply agreement (CSA).

The finalisation of the CSA also requires that Eskom be satisfied with the quality of the coal and that an agreement determining the price of the coal be finalised.

“The coal price negotiations are expected to start in the second half of the year, and Eskom has indicated that it may embark on a bulk sample burn test to confirm the coal qualities, the results of which may only be available in first half of 2014,” Firestone CEO David Knox says.

Based on the current timetable, production is expected to start in the latter half of 2015, following completion of the CSA and the confirmed drawdown of project financing facilities.

The resource update came as JV partner Sekoko Resources received con-ditional approval for a three-year coal export entitlement of 51 000 t over a 12-month period under the Quattro Allocation Scheme.

The scheme provides for four-million tons a year of export entitlement to black-owned companies through the Richards Bay Coal Terminal.

Edited by Martin Zhuwakinyu
Creamer Media Magazine Managing Editor

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