The recently completed technical study of Shumba Coal’s Mabesekwa Coal Deposit (MCD) has come up with good news for shareholders and cements the coal explorer’s status at the front runner in the independent power producer sector in Botswana.
The Botswana Stock Exchange (BSE) listed company in February signed a binding sale and purchase agreement with Daheng Group Botswana (Pty) for the purchase MCD in a bid to increase its asset base in Botswana. The technical report was posted on the BSE website this week. A Technical Report for Shumba Coal prepared by Analytika Holding (AH) showed that the potentially economic coal seams found within the MCD are the A, B and D units of the Basal Seam and the F Seam found within the Tlapana Formation of the Ecca Group of the Karoo Supergroup.
The seams had not previously been explored prior to this programme, stated Analytika. So far, diamond drill boreholes at 500 metre spacing have been completed over the area. Geological modelling has shown the Basal Seam to be laterally persistent and generally gently undulating over the majority of the MCD and to generally maintain constant thickness, it added.
“Structurally the seams appear to be relatively simple with some gentle open folding and minor disturbance due to faulting. Some dolerite intrusions have been encountered which have removed the coal seams in the restricted area. Dolerite has only very rarely been encountered within the coal seams,” the report revealed.
“The coals are of sub bituminous quality with low raw calorific value and high ash content, but the sulphur content can be reduced significantly by washing at 1.90 RD.”
The technical report concluded that the coal is of sufficiently high quality to be suitable for use in power generation, gasification or conversion to hydrocarbons.
“Washability studies have shown that beneficiation of the coal will reduce sulphur levels to acceptable World Health Organisation levels without significantly impacting on the product yield,” it added.
The Mabesekwa Coal Deposit is located in the north eastern part of Botswana and the deposit is held by Mabesekwa Colliery (Pty) Ltd under Prospecting Licence 428/2009 issued by the Minister of Mineral, Energy and Water Resources under the Mines and Minerals Act of 1999. It is currently in the process of being transferred to Shumba Coal and is waiting for the Ministers’ approval.
Shumba Coal Managing Director, Mashale Phumaphi had commissioned the technical study.
“The acquisition of a very low mining cost coal deposit is an excellent outcome for Shumba and is part of our continuing strategy of investing in Botswana based energy projects to supply affordable energy domestically and into the region,” he said earlier this year when announcing the deal to acquire the deposit.
Under the agreement, at the time Shumba said should the approvals be obtained, it will immediately issue shares to the value of US$2,000,000 to Daheng and within 18 months pay US$2,000,000 cash to Daheng.
However, should the company fail to pay Daheng, it will issue further shares to the value of US$3,300,000 to the latter and final payment of US$2,000,000 cash is payable to Daheng upon commercial production of coal from Mabesekwa.