Waterberg Coal announced an updated resource statement and a ‘substantial increase in the coal resource of the Waterberg Coal Project (WCP) Properties’ in its year-end results released on Wednesday.
The updated resource statement for the two farms Smitspan and Massenberg now stands at 3.88 billion tonnes, reports Waterberg Coal. The coal resource for WCP was initially set at 1.183 billion tonnes in December 2012.
The resource statement was prepared on behalf of the Waterberg Coal Project Joint Venture Partners by Gemecs in their capacity as Independent Competent Persons, noted Waterberg in its results report on Wednesday.
Eskom requests 40-year supply
Waterberg Coal announced in February this year that the WCJVP completed a feasibility study into the development of an opencast mining operation to produce 10-million tonnes of coal per annum for Eskom for an initial term of 30 years.
In its results statement, Waterberg noted that Eskom has asked the company to lengthen the supply agreement they are discussing to 40 years from 30, revealing the power utility’s coal outlook and ramp-up plans.
“The WCP technical team have adjusted the economic model accordingly,” stated Waterberg in the report.
A feasibility study had been presented to Eskom showing Waterberg could deliver the amount and the quality of coal required.
“Subsequent to receiving the updated economic model, Eskom requested that the proposed off-take term be increased from a 30-year period to a 40-year period, and has made several concessions on coal quality in order to increase the yield and reduce the operating costs,” Waterberg stated.
Waterberg is still studying how to reduce project capital over the LoM and how it can be phased in. It is also discussing with Exxaro sharing logistics infrastructure and building an access road across Exxaro’s property.
Additional coal demand
Recent estimates are that Eskom will need 60-million tonnes of new coal supply from next year, reports Business Day.
Waterberg said it was still discussing a deal under which it would supply Eskom with 10-million tonnes a year from its mine adjacent to Exxaro’s Grootegeluk.
The coal producer and Eskom had agreed that the contract would have a base price and an escalator, reviewed every five years.
The company announced an operating loss for the year was $49.2 million compared to a profit of $6,9 million in 2013. The Group has a net asset position of $4.895 million.
The South Africa- and Australian-listed miner is the lead and managing partner in the Waterberg Coal Project joint venture, situated in the Limpopo Province, South Africa