African Energy Resources, the Australian-listed exploration outfit, is embarking on an exercise aimed at positioning its proposed Sese project coal in a bid to take advantage of regional and global energy supply bottle-necks within the next few years.
In a statement released to the Australian Stock Exchange Friday, the company said it has enlisted the services of Phil Clark to guide it through the delicate process of “evaluating the key technical and commercial issues”.
Clark has worked for the mining giant, BHP Biliton Energy coal, responsible for projects in Australia, Colombia, South Africa and USA before.
It said some of the issues that he is expected to work on include “immediate supply of 1 million tonnes per annum ramping up to 3-5 million tonnes per annum into a combination of local markets, both within Botswana and neighbouring countries, and seaborne export markets,” the company said in statement.
The proposed Sese project seats some 50 kilometers south-west of Francistown and last year the company announced the discovery of “potentially very large deposit of thermal coal” in the northwest of Sese project.
The area is said to be having some impressive seam with an average thickness of 14.8 meters which is also closer to the surface.
Under the disclosure African Energy Resources, he said the loan priced at 3.5 percent above the LIBOR is expected to be fully paid by December 31 this year, adding that it has a call option of 4.8 million shares at 1.03 Australian dollars in favour of Macquarie Bank.
The project is situated close to rail-line that links the south and northern parts of the country in the eastern corridor ÔÇô that provides access to both South African ports and the proposed Trans Kalahari rail that would link Botswana with Namibia ports.
African Energy further indicated the closeness of the project to the rail line is huge advantage since large volumes of coal will need to be transported by rail into the seaborne export market.
The move by African Energy comes at a time when the world is predicted to see an acceleration of coal demand bolstered by the appetite from China, India and Japan.
This year alone, thermal coal is expected to outpace gas by as much as 30 percent.
“On the basis of the drilling results completed to date, the exploration target previously published by the company has been increased to 1.5 to 2 billion tones of such coal,” the company added.
The company further stated that it has started a bulk sampling exercise to determine the coal washing characteristics that will also inform it about the suitable power station for power generation.