'Mmamantswe won't go the way of Mmamabula'

Staff Writer
Dual-listed energy concern Aviva Corporation says it does not foresee its Mmamantswe project being delayed or downsized as happened to the Mmamabula Energy Project.

In an interview on the sidelines of the Botswana Resource Sector conference last week, Aviva's Managing Director Lindsay Reed said owing to a smaller size of their project, he does not see them facing the problems that befell Mmamabule.

The Mmamabula project, which includes a coal mine and two 2,500 megawatt power stations, has been downsized because of an almost three-fold increase in costs.

"Our project is quite small compared to theirs," said Reed, "so I don't think we will have any problems with EPC (engineering, procurement and construction) contractors."

Reed disclosed that Aviava was waiting for a response from South African power utility Eskom regarding its Expression of Interest (EOI) for the provision of 1,000MW of baseload power production.

Eskom issued a request for EOIs for the provision of multiple baseload to Independent Power Producers (IPPs) for the supply of 2,100MW of power generation in May.

The IPPs must deliver a minimum of 400MW per project and commission between 2012 and 2017. The Eskom EOI process is one of several commercial mechanisms under which an IPP utilising coal from the Mmamantswe project can be established.

"Aviva will continue to investigate other options while participating fully in the Eskom EOI process," Reed said.

"The company is now confident that the project scale, location and market conditions lends itself to the early entry of a joint development partner and will accelerate partnership discussions accordingly."Aviva this year started

a $3 million reserve upgrade drilling programme at its 1.3 billion-ton Mmamantswe coal project.

Reed said the resource estimate affirmed the project as a very low strip ratio open pit thermal coal deposit.

"The resource base has the potential to supply six million tonnes per annum to both a 1,500MW power project and/or direct coal sales to the power sector in South Africa," he said.

"Aviva is now focused on advancing the project through drilling to deliver a significant resource upgrade."

Two drill rigs have been mobilised for a 16,600-metre drilling programme designed to upgrade 50 percent of the deposit to measured resources. The drilling campaign is expected to be complete by the end of August while final coal quality test results are expected by the end of October.

In February, Aviva announced it had doubled its initial 600 million-ton target at Mmamantswe where it is investigating the merit of a 1,500 million-ton power station.The company expects to appoint coal preparation and mining consultants in the near future, providing the necessary economic parameters to allow the Mmamantswe resource to be upgraded to proven and probable reserves.

Aviva is earning a 90-percent interest in the Mmamantswe coal project in Botswana where it has delineated a 1.3-billion ton indicated resource. Located on the South African border and adjacent to key infrastructure including a highway, railway line and high voltage transmission lines, the project is well positioned.



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