Name and Location
Makhado coking coal project, Limpopo, South Africa.

Client
Baobab Mining & Exploration, a subsidiary of Coal of Africa Limited (CoAL).

Project Description
The Makhado project is CoAL’s anchor project in the Soutpansberg coalfield, in Limpopo, where the company has access to a significant hard coking and thermal coal resource, with the gross tonnes in situ estimated at eight-billion tonnes.

A definitive feasibility study has defined a 16-year life-of-mine, with mining expected to take place at an average rate of 12.6-million tonnes a year of run-of-mine to produce 2.3-million tonnes a year of hard coking coal and 3.2-million tonnes a year of thermal coal at steady state.

The resource will be mined on an opencast basis, with potential underground expansion.

The project has been divided into the East, Central and West pits for technical, logistical and practical reasons.

Mining will be staggered, starting with the East pit, followed by the Central and West pits. The development of the East pit will include plant and infrastructure components, which will cater for the production volumes from the other pits.

The processing plant will comprise:
• a double-stage dense-medium separation plant to destone and beneficiate the hard coking coal and the thermal product using a high-gravity wash and followed by a low-gravity wash for the coarse-size fraction of –50 +1 mm;
• a fines (–1+0.15 mm) circuit, encompassing a low-gravity reflux classifier process for the production of the coking coal and a high-gravity reflux classifier for the production of the thermal product; and
• an ultrafines (–0.15 mm) circuit of Jameson column flotation cells for the production of the coking coal and a potential thermal product.

Net Present Value/Internal Rate of Return
Not stated.

Value
Capital expenditure is pegged at R3.96-billion, including contingency.

Duration
Makhado’s 26-month construction phase is expected to start in the first half of 2017, followed by a further four-month ramp-up phase.

Latest Developments
CoAL has signed a memorandum of understanding with Qingdao Hengshun Zhongsheng, which has shown an interest in acquiring an interest in CoAL’s flagship Makhado coking coal project, in the Soutpansberg coalfield.

Hengshun has now started a due diligence on Makhado.

An optimisation study and front-end engineering and design for the Makhado project is being undertaken by international engineering and project delivery group DRA Project South Africa (DRA), with results expected by the end of May.

The study follows the original works performed by DRA during 2013.

Meanwhile, CoAL is preparing an urgent representation to Water and Sanitation Minister Nomvula Mokonyane to request that the project’s integrated water-use licence (IWUL) remain in force pending the conclusion of an appeal by the Water Tribunal.

The 20-year IWUL was granted in January, but suspended in April, following an appeal by the Vhembe Mineral Resources Forum and other parties.

The company remains in discussions with potential buyers of its Mooiplaats colliery, which was placed on care and maintenance in 2013.

CoAL is also assessing alternative options regarding a transaction at the colliery.

Key Contracts and Suppliers
Too early to state.

On Budget and on Time?
Too early to state.

Contact Details for Project Information
CoAL head of engineering Nico Pretorius, email nico.pretorius@coalofafrica.com; or investor relations and business development manager Celeste Harris, email celeste.harris@coalofafrica.com.