Mmamantswe boost as Aviva okays Kenya deal

Brian Benza
Staff Writer | Wednesday September 19, 2012 00:00

At a key meeting held in Perth, Australia last Tuesday, all shareholders agreed to offload the company's gold and base metal assets in Kenya for P150 million ($20 million).The Botswana Stock Exchange (BSE) listed Aviva announced last month that it had entered into a binding sales agreement with London-listed African Barrick Gold to sell its Kenyan assets in a deal valued at $20 million.

The company would be entitled to a further $10 million payment once a compliant indicated resource of three million ounces or more is declared over the project area.'The funds will provide Aviva with substantial flexibility to pursue growth options for shareholders either in the existing assets in Botswana or from new projects.

In Botswana our Consultant Earthtec completed an Environmental and Archaeological Impact Assessment for the Mmamantswe Coal Project, which did not identify any major impediments to the project's development. Our exploration licence on our coal project was also renewed for a further two years and Aviva will continue to consider adding to its coal portfolio in Botswana,' chairman told the shareholders meeting.

In a previous update to shareholders, the company had said that if the transaction does not proceed, it would be difficult to progress opportunities in Botswana and other opportunities as the company will have to raise money to further progress and develop its West Kenyan and Botswana projects. The company further says the deal also provides the company with a strong balance sheet, providing considerable flexibility to pursue growth opportunities for shareholders, avoiding the need to raise further funds at a time when there is significant aversion to risk in global financial markets

As at June 30, 2012, Aviva had approximately $1.1 million in cash on hand.The company recently announced that the final Environmental and Archaeological Impact Assessment report (EAIA) for the 890 million tonnes Mmamantswe project was lodged with the Botswana Department of Environmental Affairs and it is anticipated that an environmental impact statement will be issued at the end of September.

The EIA is for an initial 10 million tonnes per annum (mtpa) run of mine open cast coal mine and up to 1,500MW of power generation with initial increments of 100-200MW. It includes rail, power and water connections to the A1 infrastructure corridor in Botswana, which intersects the Mmamantswe licence area.

'This is another major step forward in progressing the Mmamantswe Coal Project. Following the release of the Botswana government's Coal Road Map Review earlier this year, the directors believe that the company's Mmamantswe project is well positioned to participate in the development of a coal sector in Botswana,' says Aviva. The Botswana Stock Exchange-listed (BSE) Company says it is also ready to tender for the construction of power stations in the country after government announced that it would call for expressions of interest for two 300MW power stations in 2012.

 Aviva is among a host of companies looking at actively exploiting Botswana's estimated 212 billion tonnes of coal.  Despite the titanic resource endowment, the country currently only has one coal mining company producing about three million tonnes per annum, with most of the supply feeding into the Morupule B Power Station.

Near producer, African Energy is aggressively advancing the 2.6 billion tonnes Sese coal resource while the recent purchase of Canadian firm; CIC Energy by India's Jindal is expected to expedite the development of the 2.4 billion tonnes Mmamabula resource.