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THE WATERBERG COAL COMPANY LTD - June 2014 Quarterly Activities Report

Release Date: 01/08/2014 07:05
Code(s): WCC     PDF:  
Wrap Text
June 2014 Quarterly Activities Report

The Waterberg Coal Company Limited
(formerly Range River Gold Limited)
(Incorporated in Australia)
(Registration number ABN 64 065 480 453)
 ASX: WCC | JSE: WCC | ISIN: AU000000WCC9
(“WCC” or “the Company”)

31 July 2014

THE WATERBERG COAL               
  COMPANY LIMITED
  ABN 64 065 480 453             June 2014 Quarterly Activities Report
    Registered office:
Level 2, 1 Walker Avenue West
 Perth, Western Australia 6005
                                 The Waterberg Coal Project (WCP)
         Australia
                                 The Waterberg Coal Company Limited (WCC) is the lead
                                 and managing partner in the Waterberg Coal Project
 Tel:+61 8 9485 0888             (WCP) joint venture, situated in the Limpopo Province,
 Fax: +61 8 9485 0077            South Africa. The Project currently has identified coal
                                 resources of 3.883 billion tonnes1 of coal contained within
   South African office:
   Level 1, The Place,           the granted mining rights; of which 2.070 Billion tonnes are
      1 Sandton Dr               contained within the measured category1.
     Sandton, 2146
      South Africa               The WCP Joint venture entered into a Memorandum of
                                 Understanding with Eskom Holdings in March 2012 for the
  Tel: +27 10 594 2240           supply and delivery of 10 million tonnes per annum (mtpa)
  Fax: +27 10 594 2253           of coal from the Project.

                                 In May 2012 the mineral consultancy, SRK Consulting of
        Contact:                 Johannesburg, South Africa were commissioned by the
   Mr Stephen Miller             WCP joint venture partners to undertake a technical and
 Executive Director/CEO          economic feasibility study for the development of the
                                 Project. In October 2013, SRK Consulting delivered to the
            Or                   project partners the results of the feasibility study (FS). A
                                 summary of the activities arising from the FS in the period
   Investor relations            ending 30 June 2014 is set out below.
     in South Africa:
      Bruce Tinney
    +27 (83) 408 3028            EPC Contract

        E-mail:                  During the quarter, the WCP Partners awarded the
 info@waterbergcoal.net          Engineering, Procurement and Construction Management
                                 contract for the development of the plant and associated
                                 infrastructure to Ardbel (a joint venture between ELB
        Directors:               Engineering Services and the DRA Group).
   Dr Mathews Phosa
       (Chairman)                Specifically, Ardbel’s brief is to design, manufacture,
      Stephen Miller             supply, delivery, assemble, install and commission the
 (Executive Director and
                                 22mtpa coal handling and preparation plant (CHPP).
          CEO)
        Lee Boyd
                                 Ardbel have also commenced work on a review of the
 (Director and Company           project capital expenditure requirements arising from the
        Secretary)               SRK Feasibility Study. This process is envisaged to be
                                 completed mid-August 2014 and which will complement
   ASX / JSE Symbol:             the on-going optimisation of the overall project by the WCP
          WCC                    project                                                team..
Ardbel also commenced preparation of a Project Execution Plan (PEP) following completion
of the Waterberg Coal Project Feasibility Study; which study is now the subject of due
diligence by a Banking Syndicate for the purposes of project funding. The PEP should be
completed during August 2014.

Project Optimisation Study

The WCP technical team continued to work on project “value engineering” and optimisation;
focussing on production scheduling, savings on mining contractor costs, plant operating
costs and capital savings associated with the materials handling and CHPP.

Pursuant to the optimisation work being undertaken on both the mine plan and infrastructure
development; the WCP are currently engaging with Exxaro Resources Limited (Exxaro) to
investigate the potential of sharing of logistics infrastructure in future.

The JSE listed Exxaro is the operator of the immediately adjacent Grootegeluk Mine which
currently produces approximately 18 mtpa of coal product and is also looking at expanding
its operations through the development of the Thabametsi coal project which shares a
common boundary with the WCP. The Grootegeluk mine has been producing coal for over
25 years.

The WCP team have been engaging with the “short listed” mining contractors during the
quarter with a view to finalisation of the process to appoint a preferred mining contractor. It is
anticipated that the preferred mining contractor status should be awarded in the September
quarter.

Eskom; Coal Supply Agreement (CSA) negotiations

Pursuant to the Eskom MOU; Eskom have now been provided demonstrable evidence that
the quantum and qualities of the specified coal can be delivered by the WCP Joint Venture.
During the quarter, Eskom requested that the proposed offtake term be increased from a 30
year period, to a 40 year period.

Subsequent to receiving the updated economic model, Eskom has relaxed the very strict cut
off for coal specifications which will increase the yield and reduce the operating costs. The
WCP technical team have adjusted the economic model accordingly. As a result of this,
Eskom and WCP are now able to advance discussions to reach agreement on price for
delivery of the specified coal product requested by Eskom. The basis for price negotiation is
a base price and escalator, with five-yearly price re-openers.

WCP have notified Eskom that a construction build commencing January 2015 would see
first coal product in Q4, 2015.

Project funding

As previously advised, the Standard Bank of South Africa Limited (SBSA), have been
mandated to arrange project finance for the construction and development of the WCP.
SBSA have appointed Hatch Goba as the Independent Technical Consultant to review all
technical matters for the WCP as part of its due diligence for the credit process.

During the quarter, the WCP team continued to work closely with Hatch pursuant to the
review process. The team expect completion of the Hatch review by the end of August 2014.
WCP Stakeholder engagement

Interaction by the WCP technical team with strategic stakeholders continued during the
quarter, including meetings with the Lephalale municipality and participation at the Strategic
Infrastructure Project 1 forum.

New Office - Johannesburg

During the quarter, the WCP took occupation of its dedicated project offices in Sandton,
Johannesburg. This stronger physical presence coupled with the appointment of additional
members to the technical team, including the project metallurgist and a project manager
reflects the increasing activity as the project further ramps up towards project “readiness”.

South Australian Tenements

The Company continues to hold 3 exploration tenements in the Gawler Craton of South
Australia which are highly prospective for gold and copper-gold mineralisation. The Gawler
Craton is host to large copper-gold deposits such as Olympic Dam and Prominent Hill to the
east, and gold deposits such as Challenger, Tarcoola and Tunkillia in the west.

During the quarter the Company continued to compile and validate exploration data relating
to the tenements and is assessing the prospectivity of targets within the license holdings.
The Company has designed work programmes to test these targets however these work
programmes have not been carried out to date. The Company is considering its strategy with
regards to these tenements.

Working capital loan to Firestone Energy Limited (FSE)

During the period, WCC entered into a further loan agreement with Firestone Energy Limited
(ASX/JSE: FSE), a 45.88% controlled entity. WCC will provide additional funding of up to
A$3million to be used for FSE’s obligations in relation to the WCP.

The loan will be under the same conditions as the prior loan. Material terms of which are:
   ? WCC grants an additional loan facility of up to $3m to be used towards project
       expenditure.
   ? No interest is payable on the loan.
   ? The loan is unsecured.

Capital Raisings

During the quarter, WCC raised funds for working capital purposes through the issue of
13,322,423 ordinary shares (raising A$1.0 million) as well as raising a further A$4.9 million
by converting loans.

Corporate Activities

During the quarter WCC announced the resignation of Directors Mr Daniel Crennan and Mr
Jonathan Hart (also Company Secretary). The Company also announced the appointment of
Mr Edwin Leith (Lee) Boyd as Company Secretary and Director with effect from 21 May
2014.

Stephen Miller
Executive Director and CEO
The Waterberg Coal Company Limited
Table 1 – Coal Resource on all six Waterberg Coal Project Properties under both
Prospecting Permit and Mining Right
                                                                        CV
                                Coal         Ash    IM % Vol %                  TS %
Resource Classification                                               (Mj/kg)
                          Resource¹(Mt) % (ad) (ad)          (ad)               (ad)
                                                                       (ad)
Measured                     2070.3       57.9     2.2     17.6                                       10.51          0.96
Indicated                     856.3       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              3883.3       58.5     2.2     17.5                                       10.33          0.99
Coal Resource ¹ based on minimum thickness cut-off of 0,5m


Note 1: Competent Person Statement

Gemecs (Pty) Limited was commissioned by the Waterberg Coal Company "WCC", to undertake an Updated Independent
Persons Geological Report for the Sekoko 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 2012 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.



Sponsor:
The Standard Bank of South Africa Limited

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