Shumba expands coal portfolio
Staff Writer | Tuesday February 7, 2017 15:22
The terms of acquisition which are subject to due diligence and Shumba Energy securing all required regulatory approvals are that an immediate cash payment of $1.4 million be paid to Hodges Resources and further payment of $1 million due one year after commercial production.
Before acquiring Morupule South, Shumba already owned two other one billion tonnes each coal deposits at Sechaba project near Palapye as well as the Mabesekwa project. Shumba plans to put up Independent Power Production plant at both projects.
According to Shumba Energy’s managing director, Mashale Phumaphi the Morupule South acquisition elevates Shumba Energy to be able to take advantage of the domestic and regional industrial market.
“The acquisition is a significant transaction. The project has 1.2 billion tonnes of high grade open cast mineable coal and is located five kilometres away from an operating rail siding which can be brought into production within a very short timeframe,” he said.
These factors according to Mashale set the Morupule South Coal project ahead of other coal development projects in the country. The Morupule South Coal Project is located within the central eastern district of Botswana directly to the south of the Morupule Colliery.
The project has a resource of 2.45 billion tonnes of JORC compliant resources of which 380 million tonnes are in the measured and indicted categories. About 1.2 billion tonnes are amenable to open cut mining. According to Phumaphi, a study results confirm robust economies across all Morupule South development scenarios. “Wood Mackenzie benchmarked Morupule south’s mining costs and coal quality against other Southern African domestic mines and the project is expected to be one of the lowest cost in the region,” he said.
Last month, Shumba Energy announced that they had signed a binding coal marketing agreement with a German firm HMS Bergbau Africa (Pty) Ltd, a full subsidiary of German-listed HMS Bergbau AG (HMS) effective 2019.
The agreement was signed through Shumba Coal Trading (SCT), a subsidiary of Shumba Energy. SCT was established in Mauritius specifically for the purposes of trading coal from Shumba Energy Mines and/or other Botswana-based coal mine operators wishing to enter the seaborne coal export market.
Under the terms of the MoU, it is intended that HMS Bergbau shall be responsible for the exclusive marketing in respect of all export products produced at the mines expectedly as of 2019, estimated at over two billion tonnes of coal. The collaboration of the parties is expected to deliver advantage of scale and combined expertise.