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FSE - Firestone Energy Limited - Investor update
FIRESTONE ENERGY LIMITED
(formerly: Centralian Minerals Limited)
(Incorporated in Australia)
(Registration number ABN 058 436 794)
Share code on the JSE Limited: FSE
Share code on the ASX: FSE
ISIN: AU000000FSE6
(SA company registration number 2008/023973/10)
("FSE" or "the Company")
INVESTOR UPDATE
Dear Shareholder,
I would like to take this opportunity to personally update you on recent
exciting developments which I expect will have a transformational impact on
our Company.
On Track for First Production in 2012.
We are on target to begin overburden stripping later this year and are
progressing well for our targeted first production at Waterberg in 2012. A
number of significant milestones have been achieved to date:
A significant JORC resource of 1.88 billion tonnes of high quality coal A
coal supply MOU signed with Eskom for over half a million tonnes in the first
year of production Ordered long lead time items to ensure progress continues
as planned Appointed major contractors for wash plant, rail and
infrastructure
Lodged mining and water rights applications.
The completion of these milestones has significantly de-risked the Waterberg
project and underpins the Board`s confidence that first production will occur
as planned in 2012.
Our discussions with South Africa`s Department of Mineral Resources regarding
mining and water rights are progressing well and we expect those applications
to be approved in the next one to two months along with the awarding of mining
contractor.
We are also confident of procuring the remaining necessary funding for the
Waterberg project. This is based on the commercial appeal of the project, as
highlighted in our Definitive Feasibility Study, and the encouraging progress
of negotiations with potential funding partners.
Secured Coal Offtake Agreement
The binding memorandum of understanding (MOU) signed with Eskom, South
Africa`s public electricity generation utility has ensured we have a buyer for
our coal from the commencement of first production at Waterberg. This is a key
agreement for the Company.
Beyond initial production, the MOU has contracted the Waterberg project to
supply Eskom with energy coal to 2018, with the option for further supply out
to 2032.
Further, we intend to approach Prime Coal users to discuss offtake potential
for our higher quality coal.
Compelling Project Economics
Independent experts Parsons Brinckerhoff have completed a Definitive
Feasibility Study into the Waterberg project. They confirmed the JORC coal
resource will support an initial mining plan yielding 120 million tonnes of
total coal production over a mine life of 21 years.
Importantly, the Definitive Feasibility Study also estimated a net present
value of the Project of $234 million, with an attractive internal rate of
return of 25 per cent. These independent estimates of the value and financial
returns of the project indicate that there is significant valuation upside
within Firestone, given our market capitalisation is currently only $50
million.
New Equity Partner Validates Project`s Commercial Appeal
The Industrial Development Corporation of South Africa (IDC) will become a
significant shareholder and cornerstone investor in Firestone and the
Waterberg project.
IDC is a 100 per cent South African state owned self-funding institution,
established in 1940. IDC has invested over $937 million in mining and energy
related projects over the last two years and has funded numerous successful
green-field and brown-field projects over the past 70 years.
IDC`s involvement in the project combined with the strong support of
Firestone`s joint venture partner, Sekoko, demonstrates the strong commercial
appeal of the Company and the transformational impact the Waterberg project
will have on Firestone.
Promising Long Term Growth Prospects
The International Journal of Coal Geology estimates the Waterberg region could
hold up to 44% of South Africa`s bituminous coal resources, indicating we are
in a very promising area for further exploration beyond first production.
Encouragingly, we have already identified a second metallurgical coal deposit
on our land. When developed this second mine will lead to a material uplift in
the scale of the Waterberg project.
The cashflow generation forecast from the Waterberg project will enable us
over time, to internally fund an active exploration program and also pay
dividends to shareholders.
Opportunity for Shareholders to Participate
Firestone shareholders are being given the opportunity to increase their
exposure at an exciting time in the
Company`s development.
Through the Shareholder Purchase Plan (SPP), eligible shareholders are able to
increase their investment in Firestone at an attractive time in the Company`s
history.
The SPP offer closes at 5:00pm (Sydney time) on Friday 3 June 2011. Offer
documents were mailed to shareholders on or about 11 May 2011. If you have not
received your offer documents or if you have any questions in relation to the
offer, please contact the SPP information line on 1800 505 206 (within
Australia) or +61 2 8256 3354 (outside Australia).
Boardroom Radio Interview
To hear the recent Boardroom Radio interview, please visit:
www.brr.com.au/event/81262
Firestone`s Long-term Vision
Firestone`s vision is to be a long-term, profitable producer of thermal and
metallurgical coal from the Waterberg region while bringing sustainable
economic and social benefits to the people of the Waterberg region and South
Africa.
It is only with our shareholders` continuing support that we will achieve our
goal. I would like to thank you for your support of the Company and I
encourage you to take part in the SPP.
Yours sincerely, David Perkins Chairman
The Waterberg Region
Extent of property: Eight farms in the JV covering 7,979 hectares. Reserves
and resources: Measured resource at Smitspan now estimated at 97.15Mt Life of
mine: 21 years at an average stripping ratio of 2.13g/t
About Firestone Energy
Firestone is an exploration and development company focused on the development
of coal projects in South Africa. Our key asset is in the highly prospective
Waterberg coal field located in South Africa where our joint venture has
eight farms covering an area of almost 8,000 hectares with a JORC resource of
over 1.8 billion tonnes.
We have a joint venture with Sekoko Resources. Sekoko Resources is a South
African-based black-owned energy and minerals company developing the coal,
magnetite iron ore and PGMs Projects in the in the Limpopo Province of South
Africa.
The Joint Venture is now ready to begin development of its first mine which
will be on the property known as Smitspan and which has a total JORC resource
of over 700 million tons.
Corporate Details: ASX: FSE JSE: FSE
Issued Capital:
2,696 million ordinary shares
Major Shareholders:
Sekoko Resources (Pty) Ltd BBY Nominees Ltd Colbern Fiduciary Nominees Ltd
Bell Potter Nominees Ltd
Directors and Officers:
Non Executive Directors: David Perkins (Chairman) Dr Pius Kasolo Colin
McIntyre
Peter Tshisevhe
Executive Directors:
Sizwe Nkosi
Company Secretary:
Jerry Monzu
Contact:
Suite B9, 431 Roberts Road Subiaco, Western Australia 6008 T: +61 (0)8 9287
4600 www.firestoneenergy.com.au
30 May 2011
Pretoria
Sponsor and Designated Advisor
River Group
Date: 30/05/2011 08:24:01 Supplied by www.sharenet.co.za
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