| Fri 11 Sep 2009, 12:11 | | FSE - Firestone Energy - Shareholders give Greenlight to South African Coal |
|
FSE
FSE
FSE - Firestone Energy - Shareholders give Greenlight to South African Coal
Acquisition
FIRESTONE ENERGY LIMITED
(formerly Centralian Minerals Limited)
(Registration number: ABN 058 436 794)
(SA company registration number: 200/023973/10
Share code on the JSE: FSE
Share code on the ASX: FSE
ISIN: AU000000FSE6
("FSE" or "the Company")
FIRESTONE SHAREHOLDERS GIVE GREENLIGHT TO SOUTH AFRICAN COAL ACQUISITION
Highlights
* Shareholders approve acquisition of initial Indicated Resource of
2.9 billion tonnes (1.12 billion tonnes of saleable coal after
washing) under second JV agreement with Sekoko Coal Ltd.
* Triggers FSE`s 30% interest in the properties, with an option to
earn a further 30%.
Perth-based mining company Firestone Energy Limited (ASX:FSE / JSE:FSE)
("Firestone" or "the Company") is pleased to announce that today it has
taken a further step toward becoming a leading producer of coal in South
Africa after receiving shareholder approval for a milestone transaction
acquiring a 2.9 billion tonne additional resource.
The Transaction
As announced on 3 July 2009, the second JV agreement with Sekoko Coal is
over four farms - Smitspan 306LQ, Hooikraal 315LQ, Minnasvlakte 258LQ, and
Massenberg 305LQ - with a combined coal resource tonnage of 2.9Bt (1,122.8Bt
of saleable coal after washing).
Under the terms of the Joint Venture Agreement, approved by Shareholders
today, Firestone`s wholly owned South African subsidiary, Lexshell 126
General Trading (Pty) Ltd ("Lexshell"), has established a joint venture
whereby Lexshell will now earn an initial 30% interest in the Properties in
consideration for:
* a reimbursement of expenses to Sekoko of up to ZAR32.99 million
(approx A$5.1 million) which has been spent by Sekoko in the
exploration and development of the Properties;
* the issue to Sekoko of new shares in Firestone in the amount of
ZAR293 million (approximately A$43.4 million) at an issue price of
A$0.05 per share, which amounts to approximately 868,176,563
Firestone shares (as approved by Shareholders today); and
* following the approval of the Bankable Feasibility Study ("BFS")
and decision to mine by the Management Board of the joint venture,
a management fee of ZAR50 million (approximately A$7.41 million)
be paid to Sekoko (or its nominee) over a 7 year period from the
date of commercial production.
Firestone has the opportunity to earn a further 30% interest (for a total of
60%) upon expenditure of ZAR50 million (approximately A$7.41 million) to
complete a Bankable Feasibility Study enabling the establishment of a future
commercial mining operation.
The shareholder approvals received today result in the issue of a further
868,176,563 shares to complete the acquisition.
Comments from Firestone CEO, Mr Garth Higgo:
Firestone CEO Garth Higgo thanked shareholders for their support, saying the
transaction marks a major milestone for the Company with the acquisition of
a substantial coal resource in a strategically important coal region in
South Africa.
"Our resource, location and potential production and exploration upside is
creating a very exciting medium to long term investment proposition. The
Joint Venture holds the rights to one of the largest holdings in the highly
prospective Waterberg coal region, which region is estimated to hold
approximately 50 percent of South Africa`s remaining coal".
"South Africa needs additional new coal mines by 2020 to meet its growing
energy needs. The State energy utility, Eskom, is building a new 4,800MW
coal fired facility, the Medupi Power Station close to FSE`s tenements,
which is expected to commence operations by 2012, requiring 18Mt thermal
coal per annum. It is also studying 3 potential new sites in the Waterberg
for a third plant expected to produce around 5000MW".
"Following the granting of the mining permit last week to commence small
scale production by the end of the year, we are moving toward becoming a
major coal producer in South Africa".
"This pit will provide the Joint Venture partners with a starter pit for the
large scale mining operation we plan to commence in 2011, capable of
producing a minimum of 18 million tonnes of saleable coal. As well as
providing us with early revenue, the activities associated with the starter
pit will help fast track, and provide greater confidence in the Bankable
Feasibility Study".
"Firestone, with its Joint Venture partner Sekoko Coal, is thus well placed
to advance our strategy to a new level, and create a formidable mining
company".
For more information please contact:
Garth Higgo
Chief Executive Officer
+61 (08) 9381-2755
www.firestoneenergy.com.au
Coal Resource
The resource has been estimated in accordance with the SAMREC and JORC codes
and the SANS 10320:2004 (South African National Standard) method of
classification of thick inter-bedded coal deposits using some 136 boreholes
of which 95 were recently drilled by Sekoko. All recent boreholes
intersected coal and were logged and sampled by suitably qualified
independent geologists. The recent borehole data, together with the
historic data, have been used to create geological models and allow
estimation of the coal resources. The total coal resource estimate based on
the data available at June 2009 (Venmyn Rand) is tabled below whilst coal
quality by resource category and farm is tabled at the end of this
announcement.
Farm GTIS GTIS GTIS GTIS
Zone Coal Coal Coal
Tonnage1 Tonnage2 Tonnage2 Tonnage2
Total Mt Inferred Indicated Total Mt
Mt Mt
Smitspan 1,850.3 150.2 541.2 691.4
306LQ
Hooikraal 136.5 74.3 21.0 95.3
315LQ
Minnasvlakte 736.6 225.9 51.1 277.0
258LQ
Massenberg 187.6 45.0 14.1 59.1
305LQ
TOTAL 2,910.9 495.4 627.4 1,122.8
1 Waterberg coal typically occurs interlaminated with shale which for the
most part cannot be mined separately from the coal and thus the zone gross
in-situ tonnage is the tonnage of coal and shale.
2In the interest of balanced reporting it is the Company`s intention to also
report the gross in-situ tonnage of coal rather than the tonnage of coal and
shale. In order to estimate the gross in-situ tonnage of coal in each zone,
rather than the zone tonnage including the rock, each zone tonnage was
discounted by the percent yield at a relative density of 1.9gm/cc (in effect
removing the influence of the shale) to derive an estimate of the coal
tonnage.
Information in this report that relates to exploration results, coal
resources or reserves on the properties Smitspan 306LQ, Hooikraal 315LQ,
Minnasvlakte 258LQ and Massenberg 305LQ is based on information compiled by
Ms Catherine Telfer who is employed by Venmyn Rand (Pty) Ltd and is a member
of The Australian Institute of Mining and Metallurgy and The South African
Institute of Mining and Metallurgy. Ms Telfer has sufficient experience
which is relevant to the style of mineralisation and type of deposit under
consideration and to the activity which she is undertaking to qualify as a
Competent Person as defined in the 2004 Edition of the "Australasian Code
for the Reporting of Exploration Results, Mineral Resources and Ore
Reserves". Ms Telfer consents to the inclusion in the report of the matters
based on her information in the form and context in which it appears.
Shareholders are advised that the trade halt on the trading of the Company`s
securities will be lifted following the release of this announcement.
Pretoria
11 September 2009
Sponsor and Corporate Advisor
River Group
Date: 11/09/2009 12:11:01 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 the information published on SENS. The JSE, their officers,
employees and agents accept no liability for (or in respect of) any direct,
indirect, incidental or consequential loss or damage of any kind or nature,
howsoever arising, from the use of SENS or the use of, or reliance on,
information disseminated through SENS.
