Name and Location
Waterberg joint venture (JV) coal project, Limpopo, South Africa.

Client
Firestone Energy (60%) and Sekoko Resources (40%).

Project Description
The project consists of eight farms, in the Waterberg coalfield, totalling 7 979 ha. The identified area over the Smitspan farm (first phase base case) indicates a mine layout covering 507 ha, extending for 3.5 km east to west and for 1.8 km north to south. This area contains 258-million tonnes, which will produce 120-million tonnes of domestic coal for local power stations and coal of export quality, with an average yield of 67% on a selective mining basis.

The project proposes the development of an opencast mining operation to produce ten-million tonnes a year of coal for Eskom for an initial term of 30 years, pursuant to the memorandum of understanding (MoU) that the JV entered into with Eskom in March 2012.

Value
Construction of the mine is estimated at between R450-million and R550-million and will be built in phases, with the first module costing R40-million.

Duration
Production is expected to start in 2015.

Latest Developments
In the three months ended June 30, the JV partners continued the progression of the definitive feasibility study (DFS) on the proposed development of an opencast mining operation.

The DFS is one of the requirements in the process of converting the current Eskom MoU to a coal supply agreement.

The DFS is in the final draft stage and the technical team is interrogating the financial model as prepared by SRK Consulting and is reviewing the proposed mine plan.

As part of the DFS, the technical team is engaging with strategic stakeholders, including, among others, Eskom, the Department of Water Affairs and Transnet Freight Rail about the delivery of services to the project.

Firestone reports that the discussions regarding the proposed arrangements for the delivery of service are progressing well.

Based on current discussions and arrangements and subject to confirmation of funding arrangements, project start-up and preproduction works are expected to start in January 2014; coal production is expected to start in the second half of 2015.

Key Contracts and Suppliers
Parsons Brinckerhoff (first stage of a DFS relating to the establishment of an opencast coal mine on the Smitspan farm); Sound Mining Solutions (mine design report); Virtual Consulting Engineers (infrastructure contractor); Ingwenya Mineral Tech (coal processing contractor); RCE Consultants (rail and civil engineering services) and the Industrial Development Corporation (finance).

On Budget and on Time?
Not stated.

Contact Details for Project Information
Firestone Energy Australia, tel +61 8 9200 4465, fax +61 8 9200 4469; South Africa +27 11 706 3548,
Sekoko Resources, tel +27 11 706 3542/48 or fax +27 11 706 3573.