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September 2013 Quarterly Activities Report
FIRESTONE ENERGY LIMITED
(Registration number ABN 058 436 794)
Share code on the JSE Limited: FSE Share code on the ASX: FSE
(SA company registration number 2008/023973/10)
("FSE" or "the Company")
ABOUT FIRESTONE ENERGY
Firestone Energy Limited is an(Incorporated in Australia)
independent, Australian exploration and
development company listed on the
Australian Stock Exchange Ltd (ASX) and
the Johannesburg Stock Exchange (JSE).
Firestone Energy has entered into a Joint
Venture with Sekoko Resources (Pty) Ltd
through which Firestone Energy has
acquired the right to 60% participation
interests in the Waterberg Coal Project
31 October 2013 located in Lephalale area, Limpopo Province,
South Africa.
The first stage of the project is to develop the
September 2013 Quarterly Activities Report
Smitspan mine which has a substantial
measured thermal coal resource and to
The Board of Firestone Energy Limited (ASX/JSE: FSE) (the “Company”,
develop the Vetleegte mine which is a
"FSE" or “Firestone”) is pleased to provide Shareholders with its Quarterly
substantial metallurgical coal deposit.
Activities Report for the 3 month period ended 30 September 2013.
Firestone Energy is committed to becoming a
The Waterberg Coal Project: The Definitive Feasibility Study profitable independent coal and energy
producer at its projects in South Africa,
As previously advised to the market, SRK Consulting of Johannesburg, South thereby making a substantial contribution to
Africa were commissioned by the Waterberg Joint Venture Partners to the social and economic development of the
undertake a Definitive Feasibility Study (“DFS”) on a proposed development of Lephalale area and South Africa.
an opencast mining operation to produce 10 Million tonnes of coal (product)
per annum to Eskom for an initial term of 30 years pursuant to the Corporate Details
Memorandum of Understanding (“MOU”) that the joint venture entered into with ASX: FSE
Eskom (the South African parastatal power utility) in March 2012 (as JSE: FSE
amended). During the quarter, the requisite technical work for the DFS was Issued Capital:
completed. 3,549 million ordinary shares
The project partners expect to publish the findings of the DFS to the market Major Shareholders:
within the next two (2) weeks following compilation of the final outstanding The Waterberg Coal Company Ltd
reports. Directors and Officers
The production of the DFS is one of the Conditions Precedent in the process of Non Executive Directors:
converting the current Eskom MOU to a Coal Supply Agreement. Tim Tebeila (Chairman)
Dr Pius Kasolo
Ben Mphahlele
As part of the DFS, the Project Partners technical team are engaging (on a Brian McMaster
regular basis) with strategic stakeholders, including inter-alia, Eskom, the David Knox
Department of Water Affairs, and Transnet Freight Rail for the timely delivery of
Officers:
services to the project. These discussions regarding proposed arrangements Mr Stephen Miller CEO and Executive
for the delivery of service are progressing well. Director
Ms Amanda Matthee CFO
Based on current discussions and arrangements, and subject to confirmation of
funding arrangements, project start-up and pre-production works is expected to Contact:
commence in April 2014. Based on this timetable, coal production is expected Level1, 330 Churchill Avenue Subiaco
to commence in the third quarter of 2015. Western Australia 6008
Tel: +61 (08) 9200 4465
Fax:+61(08) 9200 4469
Updated Resource Statement
Web: www.firestoneenergy.com.au
In the June quarter, the joint venture partners reported that a drilling
programme had been completed and an updated geological model was in the
process of being completed. This exercise has now been completed. Accruing
from this geological modelling, an updated resource statement was advised to the market on 24th
October 20131.
The updated Independent Competent Persons Resource Statement reflects the increased
borehole database following the completion of the 2013 drilling program on the four farms covered
by the Mining Right (Smitspan, Massenberg, Hooikraal and Minnasvlakte), and the two farms held
under Prospecting Rights (Vetleegte and Swanepoelpan).
The total GTIS Coal Resource on all six of the properties is 3.883 billion tonnes; of which 2.070
billion tonnes is a Measured Resource (Table 1).
Table 1 – Coal Resource on all six Waterberg Coal Project Properties under both
Prospecting Permit and Mining Right
Coal Vol CV
Resource ¹ Ash % IM % TS %
Resource Classification % (Mj/kg)
(ad) (ad) (ad)
(Mt) (ad) (ad)
Measured 2,070.3 57.9 2.2 17.6 10.51 0.96
Indicated 8,56.3 59.4 2.3 17.2 9.96 1.00
Inferred 956.7 58.9 2.2 17.5 10.26 1.03
Total Resources 3,883.3 58.5 2.2 17.5 10.33 0.99
Coal Resource ¹ based on minimum thickness cut-off of 0.5m
The updated Resource Statement represents a significant increase in the coal resource of the
Waterberg Coal Project over the previously disclosed resource statement. SRK Consulting (Pty)
Limited (December 2012) declared a GTIS resource of 1.183 billion tonnes on the two farms
Smitspan and Massenberg, of which 1.005 billion tonnes was in the Measured category.
The doubling of the Measured Resource to 2.0 billion tonnes gives the Project Partners technical
team the flexibility to optimise the SRK Definitive Feasibility Study mine plan, currently set up to
supply 10 million tonnes of coal per annum to Eskom. We expect optimisation of the mine plan to
have a favourable impact on yields, operating costs, and annual production tonnes.
A further drilling programme comprising 55 boreholes is planned in order to upgrade the geological
confidence from inferred to indicated levels on the remaining farms. 30 of the holes are scheduled
to be drilled on Hooikraal, and the remainder on Massenberg, Swanepoelpan and Vetleegte.
Surface rights
During the quarter, arrangements were concluded for the purchase of the surface rights of the
farms of Massenberg and Swanepoelpan. As at the current date, the Joint Venture Partners have
now either purchased, or completed arrangements to purchase the surface rights of Smitspan,
Massenberg, Hooikraal, and Swanepoelpan.
Corporate Activities
During the quarter FSE advised the market that it had entered into a loan agreement with The
Waterberg Coal Company Limited (WCC) whereby WCC would advance up to A$3 million to be
used for FSE’s project finance obligations in relation to the Waterberg Coal Project. The loan is
unsecured and non-interest bearing. During the quarter, FSE drew down on the WCC loan facility.
2
Subsequent to the end of the quarter (10 October 2013); the Company received notification from
The Waterberg Coal Company Limited that its off-market takeover bid for all the ordinary shares in
FSE had closed. At the conclusion of the offer, The Waterberg Coal Company Limited’s
shareholding in FSE was 45.88%.
Yours sincerely
Stephen Miller
Chief Executive Officer
www.firestoneenergy.com.au
3
Footnote:
1
Competent Person Statement
Gemecs (Pty) Limited was commissioned by the Waterberg Coal Project Joint Venture Partners, to undertake an Updated Independent Persons
Geological Report for the Waterberg Coal Project.
The Coal Resources were estimated in accordance with the South African code for the Reporting of Exploration Results, Mineral Resources and
Mineral Reserves (“SAMREC Code”), Australasian Code for Reporting of Exploration Results. Mineral Resources and Ore Reserves (“the JORC
Code”) and South African National Standard (SANS 10320:2004) guidelines.
The information in this announcement that relates to Exploration Results, Mineral Resources or Ore Reserves is based on information compiled by
Mr Coenraad D van Niekerk, Pr.Sci.Nat (Reg. No 400066/98), M.Sc Hons (Geology), MDP, an employee of Gemecs (Pty) Limited, who is a Fellow of
the Geological Society of South Africa. Mr Niekerk is a mining geologist with 38 years’ experience in the mining industry, sufficient experience
relevant to the style of mineralisation and type of deposit under consideration and to the activity which he is undertaking to qualify as a Competent
Person as defined in the 2004 Edition of the Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore Reserves. Mr
Niekerk consents to the inclusion in the announcement of the matters based on this information in the form and context in which it appears.
th
This resource upgrade and attaching report was advised to the market and lodged with ASX on 24 October 2013.
Johannesburg
31 October 2013
Sponsor
River Group
4
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