| Tue 29 Jun 2010, 9:21 | | FSE - Firestone Energy Limited - Definitive feasibility study - Smitspan Coal |
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FSE
FSE
FSE - Firestone Energy Limited - Definitive feasibility study - Smitspan Coal
Project
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")
Definitive feasibility study - Smitspan Coal Project
Firestone Energy Limited (ASX/JSE: FSE) wishes to announce that independent
consultants Parsons Brinckerhoff have completed the first stage of a Definitive
Feasibility Study (DFS) relating to the establishment of an open cast coal mine
on the Smitspan farm situated on the Waterberg (South African) tenements where
FSE has the right (in terms of joint venture agreements with Sekoko Coal Ltd) to
earn up to a 60 % share of any project established to exploit the underlying
coal.
The DFS updates the Preliminary Feasibility Study (PFS) which was published in
November 2009 as shown below:
Executive Summary DFS
Physicals
Case: DFS PFS
ROM (Mill Tonnes): 278,4 270,0
Product (Mill Tonnes): 120,8 85,0 Steam
20,0Prime
Overburden (Mill cubic m): 266,2 275
Yield: 43,4% 38,0%
One product Two products
Financial Analysis
OUTPUT DFS BASE CASE PFS
Mine life 21yrs-all open pit 21 years
NPV @ 10% ZAR 1,499 million ZAR 572 million
IRR (post tax) 25% 14,5%
Total Capex ZAR 1,22 million ZAR 3,985 million
Exchange rate: $1AUD=ZAR6.4 (DFS includes contractor mining)
The DFS has been calculated on the basis of establishing a mine capable of
producing the under mentioned quantities of coal.
Base Case
YEARS Total tonnes produced
(Mine Life) per annum (mtpa)
1 1,0
2 1,5
3 1,5
4 1,5
5 1,5
6-8 3,0
9-10 5,0
11-15 7,0
16-21 10,0
Mill tonnes saleable product 120,8
The first five years of the DFS has been estimated to a cost accuracy of +/- 10
to 15% and shows that the establishment of a standalone 1.5 mtpa mine to be
economically viable. From year 6 onward the DFS has been done to a cost accuracy
of +/- 15 to 20% when the annualized production increases.
FSE expects that when the results of further drilling that has been conducted on
the properties are received from the laboratories the models will be updated and
the estimates from year 6 onward will be further refined to a +/- 10% cost
accuracy. FSE believes this updated report should be published within 6 to 8
weeks from date hereof.
The Smitspan first stage open cast has dimensions of 4.1km W-E and 2.2km N-S and
is only 75 vertical metres deep down to the base of Coal Seam No.7 with a very
low waste/coal strip ratio and top coal within 28 vertical metres of the
surface.
The DFS has not attempted to place a value on the production of high grade
export coal from the Smitspan property nor has it valued residual coal under the
pit floor or in the walls of the proposed Smitspan open cast.
In addition, the DFS has not valued the reserves underneath the Swanepoelpan and
Duikerfontein farms controlled by the joint venture which are situated
immediately to the west of the proposed Smitspan open cast. These additional
resources (together with an assessment of the value of the coal on the Hooikraal
and Vetleegte farms controlled by the joint ventures where drill holes have
intersected shallow high grade coal) require additional work and will be
assessed subsequently.
Establishment of a mine depends upon the conclusion of binding off take and
infrastructure agreements, the conclusion of an environmental impact assessment
and the granting of the required mining permit and related permissions.
FSE chairman John Dreyer said "FSE was delighted that the DFS had shown that
there is a very robust case for the establishment of the first stage open cast
which can be expanded to meet market demand. The low waste/coal strip ratio
allows for the production of low cost domestic coal. Given the additional large
scale reserves controlled by the joint ventures the Board was confident that
there remained considerable potential to upgrade the value of the resource (over
and above the value shown in the DFS) on a systematic and planned basis."
Competent Persons Statement
Information in this announcement that relates to exploration results, coal
resources or reserves on the properties Smitspan 306LQ, Hooikraal 315LQ,
Minnasvlakte 258LQ and Massenburg 305LQ is based on information reviewed by Mr
James Andrew Johnson who is employed by Sekoko Resources (Pty) Ltd and is a
fellow member of The South African Institute of Mining and Metallurgy. Mr
Johnson has sufficient experience which is 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 the Reporting of Exploration Results,
Mineral Resources and Ore Reserves" (The JORC Code). Mr Johnson consents to the
inclusion in the announcement of the matters based on his information in the
form and context in which it appears.
Further information can be obtained by contacting Mr John Dreyer.
John Dreyer
Chairman
+61 (08) 9381-2755
www.firestoneenergy.com.au
+61 (08) 9381-2755
www.firestoneenergy.com.au
About Firestone Energy
Firestone Energy is an independent Australian exploration company focused on
developing coal projects in South Africa. The company is currently exploring the
richly endowed Waterberg coal field in the Limpopo Province of South Africa.
The Company is committed to value-added growth through becoming an independent
coal and energy producer at its projects in South Africa.
The Company has entered into three joint ventures with Sekoko Resources, a South
African black empowerment company (BEE) and Sekoko has two directors on the
Board of Firestone Energy.
Corporate Details
ASX: FSE
JSE: FSE
Issued Capital:
2,331 million ordinary shares
Major Shareholders:
Sekoko Resources (Pty) Ltd
Colbern Fiduciary Nominees Ltd
Bell Potter Nominees Ltd
Directors and Officers:
Non Executive Directors:
John Dreyer (Chairman)
Timothy Tebeila (Deputy Chairman)
Amanda Matthee
Colin McIntyre
Managing Director
John Wallington
Company Secretary
Jerry Monzu
Contact:
Level 1, 63 Hay Street
Subiaco, Western Australia 6008
Tel: +61 (0)8 9381 2755
Web: www.firestoneenergy.com.au
Date: 29 June 2010
Company secretary
Pretoria
29 June 2010
Sponsor and Corporate Advisor
River Group
Date: 29/06/2010 09:21:01 Produced by the JSE SENS Department.
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