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FSE - Firestone Energy - Shareholders give Greenlight to South African Coal

Release Date: 11/09/2009 12:11
Code(s): FSE
Wrap Text

FSE - Firestone Energy - Shareholders give Greenlight to South African Coal Acquisition FIRESTONE ENERGY LIMITED (formerly Centralian Minerals Limited) (Registration number: ABN 058 436 794) (SA company registration number: 200/023973/10 Share code on the JSE: FSE Share code on the ASX: FSE ISIN: AU000000FSE6 ("FSE" or "the Company") FIRESTONE SHAREHOLDERS GIVE GREENLIGHT TO SOUTH AFRICAN COAL ACQUISITION Highlights * Shareholders approve acquisition of initial Indicated Resource of 2.9 billion tonnes (1.12 billion tonnes of saleable coal after washing) under second JV agreement with Sekoko Coal Ltd. * Triggers FSE`s 30% interest in the properties, with an option to earn a further 30%. Perth-based mining company Firestone Energy Limited (ASX:FSE / JSE:FSE) ("Firestone" or "the Company") is pleased to announce that today it has taken a further step toward becoming a leading producer of coal in South Africa after receiving shareholder approval for a milestone transaction acquiring a 2.9 billion tonne additional resource. The Transaction As announced on 3 July 2009, the second JV agreement with Sekoko Coal is over four farms - Smitspan 306LQ, Hooikraal 315LQ, Minnasvlakte 258LQ, and Massenberg 305LQ - with a combined coal resource tonnage of 2.9Bt (1,122.8Bt of saleable coal after washing). Under the terms of the Joint Venture Agreement, approved by Shareholders today, Firestone`s wholly owned South African subsidiary, Lexshell 126 General Trading (Pty) Ltd ("Lexshell"), has established a joint venture whereby Lexshell will now earn an initial 30% interest in the Properties in consideration for: * a reimbursement of expenses to Sekoko of up to ZAR32.99 million (approx A$5.1 million) which has been spent by Sekoko in the exploration and development of the Properties; * the issue to Sekoko of new shares in Firestone in the amount of ZAR293 million (approximately A$43.4 million) at an issue price of A$0.05 per share, which amounts to approximately 868,176,563 Firestone shares (as approved by Shareholders today); and * following the approval of the Bankable Feasibility Study ("BFS") and decision to mine by the Management Board of the joint venture, a management fee of ZAR50 million (approximately A$7.41 million) be paid to Sekoko (or its nominee) over a 7 year period from the date of commercial production. Firestone has the opportunity to earn a further 30% interest (for a total of 60%) upon expenditure of ZAR50 million (approximately A$7.41 million) to complete a Bankable Feasibility Study enabling the establishment of a future commercial mining operation. The shareholder approvals received today result in the issue of a further 868,176,563 shares to complete the acquisition. Comments from Firestone CEO, Mr Garth Higgo: Firestone CEO Garth Higgo thanked shareholders for their support, saying the transaction marks a major milestone for the Company with the acquisition of a substantial coal resource in a strategically important coal region in South Africa. "Our resource, location and potential production and exploration upside is creating a very exciting medium to long term investment proposition. The Joint Venture holds the rights to one of the largest holdings in the highly prospective Waterberg coal region, which region is estimated to hold approximately 50 percent of South Africa`s remaining coal". "South Africa needs additional new coal mines by 2020 to meet its growing energy needs. The State energy utility, Eskom, is building a new 4,800MW coal fired facility, the Medupi Power Station close to FSE`s tenements, which is expected to commence operations by 2012, requiring 18Mt thermal coal per annum. It is also studying 3 potential new sites in the Waterberg for a third plant expected to produce around 5000MW". "Following the granting of the mining permit last week to commence small scale production by the end of the year, we are moving toward becoming a major coal producer in South Africa". "This pit will provide the Joint Venture partners with a starter pit for the large scale mining operation we plan to commence in 2011, capable of producing a minimum of 18 million tonnes of saleable coal. As well as providing us with early revenue, the activities associated with the starter pit will help fast track, and provide greater confidence in the Bankable Feasibility Study". "Firestone, with its Joint Venture partner Sekoko Coal, is thus well placed to advance our strategy to a new level, and create a formidable mining company". For more information please contact: Garth Higgo Chief Executive Officer +61 (08) 9381-2755 www.firestoneenergy.com.au Coal Resource The resource has been estimated in accordance with the SAMREC and JORC codes and the SANS 10320:2004 (South African National Standard) method of classification of thick inter-bedded coal deposits using some 136 boreholes of which 95 were recently drilled by Sekoko. All recent boreholes intersected coal and were logged and sampled by suitably qualified independent geologists. The recent borehole data, together with the historic data, have been used to create geological models and allow estimation of the coal resources. The total coal resource estimate based on the data available at June 2009 (Venmyn Rand) is tabled below whilst coal quality by resource category and farm is tabled at the end of this announcement. Farm GTIS GTIS GTIS GTIS Zone Coal Coal Coal Tonnage1 Tonnage2 Tonnage2 Tonnage2 Total Mt Inferred Indicated Total Mt Mt Mt
Smitspan 1,850.3 150.2 541.2 691.4 306LQ Hooikraal 136.5 74.3 21.0 95.3 315LQ Minnasvlakte 736.6 225.9 51.1 277.0 258LQ Massenberg 187.6 45.0 14.1 59.1 305LQ TOTAL 2,910.9 495.4 627.4 1,122.8 1 Waterberg coal typically occurs interlaminated with shale which for the most part cannot be mined separately from the coal and thus the zone gross in-situ tonnage is the tonnage of coal and shale. 2In the interest of balanced reporting it is the Company`s intention to also report the gross in-situ tonnage of coal rather than the tonnage of coal and shale. In order to estimate the gross in-situ tonnage of coal in each zone, rather than the zone tonnage including the rock, each zone tonnage was discounted by the percent yield at a relative density of 1.9gm/cc (in effect removing the influence of the shale) to derive an estimate of the coal tonnage. Information in this report that relates to exploration results, coal resources or reserves on the properties Smitspan 306LQ, Hooikraal 315LQ, Minnasvlakte 258LQ and Massenberg 305LQ is based on information compiled by Ms Catherine Telfer who is employed by Venmyn Rand (Pty) Ltd and is a member of The Australian Institute of Mining and Metallurgy and The South African Institute of Mining and Metallurgy. Ms Telfer has sufficient experience which is relevant to the style of mineralisation and type of deposit under consideration and to the activity which she is undertaking to qualify as a Competent Person as defined in the 2004 Edition of the "Australasian Code for the Reporting of Exploration Results, Mineral Resources and Ore Reserves". Ms Telfer consents to the inclusion in the report of the matters based on her information in the form and context in which it appears. Shareholders are advised that the trade halt on the trading of the Company`s securities will be lifted following the release of this announcement. Pretoria 11 September 2009 Sponsor and Corporate Advisor River Group Date: 11/09/2009 12:11:01 Supplied by www.sharenet.co.za Produced by the JSE SENS Department. The SENS service is an information dissemination service administered by the JSE Limited (`JSE`). The JSE does not, whether expressly, tacitly or implicitly, represent, warrant or in any way guarantee the truth, accuracy or completeness of the information published on SENS. The JSE, their officers, employees and agents accept no liability for (or in respect of) any direct, indirect, incidental or consequential loss or damage of any kind or nature, howsoever arising, from the use of SENS or the use of, or reliance on, information disseminated through SENS.

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