Wrap Text
December 2014 Quarterly activities report
FIRESTONE ENERGY 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")
DECEMBER 2014 QUARTERLY ACTIVITIES
REPORT
The Waterberg Coal Project (WCP)
Firestone Energy Limited (FSE) is a participant in the Waterberg Coal Project (WCP) joint
venture, situated in the Limpopo Province, South Africa. The Project currently has identified
coal resources of 3.883 billion tonnes1 of coal contained within the granted mining rights; of
which 2.070 billion tonnes are contained within the measured category1.
The WCP Joint venture entered into a Memorandum of Understanding with Eskom Holdings in
March 2012 for the supply and delivery of 10 million tonnes per annum (mtpa) of coal from the
Project.
In May 2012 the mineral consultancy, SRK Consulting of Johannesburg, South Africa were
commissioned by the WCP joint venture partners to undertake a technical and economic
feasibility study for the development of the coal project predicated on the proposed offtake
arrangements with Eskom (Eskom Project). In October 2013, SRK Consulting delivered to
the project partners the results of the Definitive feasibility study (DFS).
The Export Project - Definitive Feasibility Study
During the quarter, work continued on a DFS for the Export Project, to be located in the south
of the WCP area. The Export Project anticipates the build up to 4 million tonnes per annum (in
saleable product) over a six year period, with first coal product forecast for the 2nd quarter
2016. The abbreviated period to complete this study accrues from the significant database and
work product that was generated from the Eskom Project DFS. Additional work has been
carried out with respect to logistics (including rail), coal product off-take arrangements, water
and mine planning.
Project Optimisation Study - The Eskom Project
With the current focus on the Export Project, work on the Eskom project in terms of
optimisation and ongoing value engineering is on hold until further direction is received from
Eskom in terms of advancing the status of negotiations with respect to the Coal Supply
Agreement. It is expected that discussions in this respect will resume in the March quarter
2015.
Access to Water
Discussions with the Lephalalele Municipality (Municipality), as reported on 31 October 2014,
have advanced to the stage that Sekoko Coal (Pty) Ltd (Sekoko), a South African registered
company and holder of the rights, titles and interests that comprise the WCP, has received
confirmation by way of an MOU from the Municipality that an in principle agreement has been
reached for Sekoko to be awarded the right to utilise all treated water, other than water
currently contracted by the Municipality to third parties and to become operator of the plant.
The Paarl Water Treatment plant has a treatment capacity of 10 million litres per day, or 3.64
million cubic metres per annum. Sufficient water is available for the proposed project
development.
Port capacity
During the quarter WCP Partners entered discussions with RBT Grindrod Terminals regarding
port allocation at the Richards Bay Terminal (RBGT) for confirmation of their capacity for the
handling and loading of project coal. Negotiations are proceeding on the final volumes,
timeline and contracted price. A formal contract will be executed once final arrangements with
offtaking parties has been completed with confirmed volumes for offtakes for the first 5 years.
Project funding - The Export Project
As previously advised, the WCP Partners have commissioned a DFS for a stand alone Export
Project. Accruing from the preliminary results of the DFS, the WCP Partners are in discussions
with certain banks with respect to funding arrangements for the proposed development.
Pursuant to the discussions to date with such parties, The Snowden Group has been
commissioned as Independent Technical Experts to produce a due diligence report for the
purposes of bank funding. It is anticipated that the technical due diligence will be completed so
that a draft financing termsheet can also be tendered during the March quarter.
Corporate
As previously advised, on 9 April 2013, The Waterberg Coal Company Limited (WCC),
Firestone's 45.88% shareholder, drew down on the Convertible Secured Facility, with a face
value of A$35 million, from a syndicate of Lenders with The Standard Bank of South Africa
Limited ("Standard Bank") as facility agent (the "Lenders").
As set out in an Announcement dated 16th September 2014, WCC had entered into
discussions with the Lenders with respect to the restructuring of the Facility; including an
extension to the Facility's maturity date. Shareholders are advised that the Facility matured on
9 October 2014 and has been extended on an "on demand" basis without a specified date for
repayment.
A portion of capital and interest owing under the Facility, amounting to A$4.3m, was paid to
the Lenders by WCC during the period.
The revised balance of the Facility as at 17 October 2014 together with accumulated interest is
A$39.3m.
On 10 November 2014 FSE announced that it had entered into a term sheet to raise USD 5
million through a convertible note issue. The funds to be raised as a result of the issue will be
applied to working capital and to fund project related costs.
On 19 November 2014 George Magashula resigned as a director of the company.
The Company's Annual General Meeting was held on 28 November 2014 and all resolutions
were passed at the meeting.
On 20 January 2015 the company announced to the market the receipt of Tranche 1 funds
arising from the convertible note facility in the sum of A$ 3.13million (after costs). Pursuant to
approval at the 2014 AGM, 475,971,429 Convertible Notes of AUS$0.007 each have been
issued to Four Oaks Credit Fund Limited. Proceeds have been allocated to settlement of
project related costs.
Stephen Miller
Managing Director
www.firestoneenergy.com.au
ASX Release
30 January 2015
FIRESTONE ENERGY LIMITED
ABN 71 058 436 794
Registered office:
Level 2, 1 Walker Avenue West Perth, Western Australia 6005
Australia
Tel:+61 8 9485 0888
Fax: +61 8 9485 0077
South African office:
Level 1, The Place,
1 Sandton Dr, Sandton, 2146, South Africa
Tel: +27 10 594 2240
Fax: +27 10 594 2253
Contact:
Mr Stephen Miller
Managing Director
Or
Investor relations
in South Africa:
Bruce Tinney
+27 (83) 408 3028
E-mail:
info@waterbergcoal.net
Corporate Details:
Major Shareholders:
The Waterberg Coal Company Ltd
Directors and Officers:
Non Executive Directors:
Dr Mathews Phosa (Chairman)
Edwin Leith Boyd
Officers:
Mr Stephen Miller Managing Director
Ms Amanda Matthee CFO
Mr Edwin Leith Boyd Company Secretary
ASX / JSE Symbol:
FSE
Web: www.firestoneenergy.com.au
2 February 2015
Johannesburg
Sponsor and Corporate Adviser
River Group
Table 1 - Coal Resource on all six Waterberg Coal Project Properties under both Prospecting Permit and Mining Right
Resource Classification Coal Resource(Mt) Ash % (ad) IM % (ad) Vol % (ad) CV (Mj/kg) (ad) TS % (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- 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
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.
Date: 02/02/2015 08:00:00 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
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