Hodges Resources Ltd, the Australian exploration outfit, is on the verge of developing a coal mine following revelations it is now moving into conceptual studies on a variable staged mining approach with associated integrated power projects.
In an update to shareholders, the ASX quoted company said the move is one step closer to the decision to develop the coal mine, and follows the completion of the first phase of infill drilling at the Central Block of the Morupule South project.
The company aims to complete concept studies and commence prefeasibility studies on various mine and integrated power projects before the end of the year.
Hodges Managing Director Mark Major said the move is another positive step for the company as it moves towards a production scenario.
“The key to unlocking Botswana coal is to be able to produce a saleable coal for the lowest cost. Given that some beneficiation is required we need low cost operations and good return yields,” Major said.
“On the current work completed we know we can obtain great yields to produce a premium thermal coal product and now need to monetise this by undertaking conceptual economic studies on our mining and product use options,” he added.
Since the end of the reconnaissance drilling in March 2012, the Company has completed 25 diamond cores holes in the Central Block area of the Morupule South Project.
These holes were drilled in the area where shallow coal was initially found during the reconnaissance drilling in late 2011.
A series of holes were drilled around the initial reconnaissance holes at 2km drill hole spacing and in some areas down to 1km spacing where only open-hole drilling techniques (non-core sampling) were used in order to carry out more coal quality work on the identified coal units.
After receiving the initial coal quality results several areas were then drilled to 500m centres and at 250m centres in one area.
Hodges is focusing on the areas amenable to open pit operations as identified during the recent resource studies.
Three areas, namely the Central, West and East blocks, were determined to have suitable low strip ratios for economic viability using low cost open pit mining methods.
A new 400Kv power line runs over the eastern side of the project which links into the domestic and export transmission grid from the newly built (600 MW) Morupule B power station. This project is located in the middle of the major and only significant energy infrastructure hub in Botswana.
Once drilled, all holes were logged, selectively sampled and transported to M&L Inspectorate laboratories in Middleburg, South Africa, for analysis.
All samples will undergo proximate and ultimate analysis to determine the main coal characteristics. In addition to analyses of the entire interbedded coal sequences, numerous coal seams will be selected to undergo float ÔÇô sink (wash) analysis as well as other specific analysis for determining the combustion properties of each coal unit.
This will help confirm the viability of the coal beneficiation and thermal combustion properties of the raw coal, washed coal and the middlings. The drill spacing will allow the resource to be upgraded into a Measured or Indicated category on which the future mining economics can be evaluated.
Hodges intends to complete additional infill drilling over the east, central and west blocks to bring the majority of this area into Measured or Indicated category status within the next year. The Company will also complete large diameter bulk sampling holes in the areas where initial mining would be undertaken.
The Company aims to complete concept studies and commence prefeasibility studies on various mine and integrated power project options before the end of the year. Baseline studies and the preparation of the environmental and social impact assessments are ongoing and will be used in permitting.
