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June 2015 Quarterly Activities Report
The Waterberg Coal Company Limited
ASX Release The Waterberg Coal Company Limited
(Incorporated in Australia)
(Registration number ABN 64 065 480 453)
31 July 2015 ASX: WCC | JSE: WCC | ISIN: AU000000WCC9
(“WCC” or “the Company”)
THE WATERBERG COAL
COMPANY LIMITED
ABN 64 065 480 453 June 2015 Quarterly Activities Report
Registered office: The Waterberg Coal Project
Level 2, 1 Walker Avenue
West Perth, Western The Waterberg Coal Company Limited (WCC)
Australia 6005 is a participant in the Waterberg Coal
Australia Project (WCP) joint venture, situated in
the Limpopo Province, South Africa. The
Tel:+61 8 9485 0888 Project currently has identified coal
Fax: +61 8 9485 0077
resources of 3.883 billion tonnes1 of
South African office: coal contained within the granted mining
Level 1, The Place, rights; of which 2.070 Billion tonnes are
1 Sandton Dr contained within the measured category1.
Sandton, 2146
South Africa In October 2013, SRK Consulting
(Australasia) Pty Ltd delivered to the
Tel: +27 10 594 2240 project partners the results of the
Fax: +27 10 594 2253 definitive feasibility study (DFS) for
the proposed development of a coal
Contact: project to deliver up to 10 million
Mr Stephen Miller tonnes of coal product to Eskom Holdings
Executive Director/CEO SOC Ltd (Eskom) on a take or pay basis,
pursuant to a memorandum of understanding
Or dated on or about 23 March 2012 (the
Eskom Project).
Investor relations
in South Africa: A further DFS, for a proposed development
Lawrie Mackintosh of an export project mine, was completed
E-mail: in Q1 of 2015. This proposed development
info@waterbergcoal.net would see total production of up to
4 million tonnes per annum (mtpa) of high
quality export thermal coal product over
Directors: a 3 to 4 year period (the Export
Dr Mathews Phosa Project). This study was completed
(Chairman) subsequent to the preparation of a DFS
Stephen Miller for the proposed Eskom Project.
(Executive Director With respect to the Export Project DFS,
and an optimisation study is current in
CEO) progress. A significant focus of this
Lee Boyd optimisation study is the review of the
projects capital requirements with a view
(Director and Company to enhancing the viability of the
Secretary) project.
ASX / JSE Symbol:
WCC
The optimisation includesconsultation with world-class plant
designers and competitive contract vendors for the mining and
processing facilities and services. The WCP Partners areconfident
that the optimisation process will derive positive outcomes resulting
in considerable reductions in capital funding requirements for
the project.
During the quarter the WCP Joint Venture Partners (WCP
Partners) and its consultants revised its original washing
process plans to enable production of a higher quality of coal
suitable for the export market.
Additionally, the optimised plant design allows flexibility
for production of a higher quality power station feed product.
This power station product is planned to be stockpiled during
the export grade coal mining phase until the potential
Independent Power Production (IPP) platform is completed.
Utilisation of this product as IPP feed will result in optimal
resource utilisation and a barren waste dump.
Coal Processing Plant
During the quarter WCP Partners commenced negotiations with
experienced processing and services providers for a build-own-
operate (BOO) dual module plant, each with a 550 tons per hour
capacity.
The proposed plant design configures a two-stage wash process
providing greater flexibility in product quality output. The
advantage of such a design is clearly an ability to optimise a
given product output mix to meet a range of commercial coal
requirements including export quality, IPP platform feed stock
and Eskom specification product from the one plant.
The WCP Partners are confident that adopting a BOO strategy in
conjunction with well experienced operators will significantly
reduce up front capital requirements and provide for a swift
progression to mining and production.
The WCP Partners expect to complete its evaluation of BOO
providers during the September quarter.
Mining Operations
Negotiations with a number of parties for the award of the
mining contract were advanced during the quarter. The bidding
process, guided by our mining engineer, has progressed to a
point where we have indicative pricing on a ZAR/ROM per ton
which is within the parameters of the WCP Partners’ financial
modelling and with the WCP Partners’ costings in the DFS.
Project Water Supply
In October 2014 WCP Partners advised they had entered into a
memorandum of understanding with the Lephalale Municipal
Council (LMC) with respect to the Paarl Waste Water Treatment
Facility (the Facility) whereby the WCP Partners will take
over the management and operation of the Facility for the
purpose of supplying water to the WCP.
During the quarter the WCP Partners were in negotiations with
the LMC to complete the formally binding long form of the
agreement.
The Facility has a treatment capacity of 10 million litres per
day, or 3.64 million cubic metres per annum which will provide
the WCP with sufficient water not only for its proposed Export
Project development, but also Stage 1 of its proposed IPP
development which is currently under technical and economic
assessment.
Project Optimisation Study – The Eskom Project
With the current focus on the Export Project and the IPP
platform, value engineering work on the Eskom Project remains
a lower priority and will continue so until further direction
is received from Eskom in terms of advancing the status of
negotiations with respect to the Coal Supply Agreement.
Power Production for Project Construction Purposes
WCP Partners are in discussions with multiple parties
regarding the onsite production of power generation. Guided
by WCP consultants, SMEC Australia Pty Ltd (SMEC), who have
extensive experience with this sector; will be providing
guidance and advice to the WCP Partners in respect of
electricity generation plant specifications to ensure
achievement of optimal technological configuration and
operational efficiency for the plant. SMEC will also be
assisting the WCP Partners to identify the most pre-eminent
project and funding partners.
Export Product Off-take Arrangements
Negotiations are ongoing with a number of international
parties who have expressed considerable interest in entering
into a long term off-take arrangements for the export product
that is expected to be produced from the Export Project
development.
Project Funding – The Export Project
Accruing from the preliminary results of the DFS and the
optimisation studies for the Export Project, the WCP Partners
are in discussions with certain banks with respect to funding
arrangements for the proposed development. Pursuant to the
financing discussions, Snowden Mining Industry Consultants Pty
Ltd (Snowden Group) has been commissioned as independent
technical experts to produce a due diligence report for the
purposes of project funding.
IPP Strategy
On 11 December 2014 the government of South Africa announced
it would be turning to the private sector to help solve its
energy crisis. The government announced a “5-point plan” to
urgently bring about extra generation capability for an energy
starved economy. The major plank of the 5-point plan was the
launching of a coal fired independent power producer programme
for an initial 2,500MW of generation capacity. Additionally,
the government announced it would be looking for co-generation
options. WCP Partners has positioned itself to capitalise on
both sets of opportunities.
In preparation for the long awaited announcement of the IPP
Programme; WPC submitted registration of its intent to
participate on 19 December 2014 having on 7 December 2014
lodged its registration with the Department of Environmental
Affairs of its intent to build a power generation plant to be
situated within the confines of its existing granted mining
and prospecting rights; which collectively form the WCP area.
During the current quarter, WCP Partners have been preparing
preliminary technical and economic models to determine the
most appropriate, capital efficient and economical fashion in
which to facilitate the development of an IPP Project from
feed stock generated from its proposed coal mining projects.
WCP Partners are currently engaging with a number of parties,
including mining and civil engineering contractors on the
mining project(s); and potential technology partners, IPP
developers and financial groups to partner with it in creating
a new independent integrated energy company to be located
within the confines of the WCP mining project area.
South Australian Tenements
WCC holds 2 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, WCC continued to compile and validate
exploration data relating to the 2 tenements and is assessing
the prospectively of targets within the license holdings. WCC
has designed work programmes to test these targets however
these work programmes have not been carried out to date. WCC
is considering its strategy with regards to these tenements.
Corporate
- Refinancing the SBSA Facility
WCC entered into a voluntary suspension of its shares on
19 March 2015 whilst it progresses negotiations with
Standard Bank of South Africa Limited (SBSA) (and other
participants) with respect to “refinancing” the SBSA
convertible note facility (the Facility). Given that the
international financial market and commodities markets
continue to be somewhat challenging; interested parties
(in the refinancing) have been undertaking very
comprehensive due diligence programmes. This has
resulted in the process being drawn out much longer than
originally anticipated. Negotiations are now at an
advanced stage and the Board is hopeful of finalising
arrangements prior to expiry of the current voluntary
suspension period which is 10 August 2015.
- Issue of Securities
On 30 June 2015, having fresh availability of its 15%
capacity to issue securities pursuant to ASX listing rule
7.1, WCC issued 2,668,750 fully paid ordinary shares, at
an issue price of $0.063, and 32,002,346 free attaching
options (exercise price $0.08 and expiry 30 June 2017) to
conclude a placement which was unable to be completed
during June 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
Resource Coal CV
Ash % IM % Vol % TS %
Classification Resource¹ (Mj/kg)
(ad) (ad) (ad) (ad)
(Mt) (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 Resource¹ based on minimum thickness cut-off of 0,5m
Note 1: Competent Person Statement
Gemecs (Pty) Limited was commissioned by the WCC, to undertake an Updated
Independent Persons Geological Report for WCP.
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.
31 July 2015
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The Standard Bank of South Africa Limited
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