| Mon 26 Jul 2010, 10:20 | | FSE - Firestone Energy Limited - June quaterly activities report |
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FSE
FSE
FSE - Firestone Energy Limited - June quaterly activities report
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")
ASX Announcement
The Board of Firestone Energy Limited (ASX/JSE: FSE) is pleased to provide
Shareholders with its Quarterly Activities Report for the 3 month period
ended 30 June 2010.
HIGHLIGHTS
- First appraisal of DFS completed with positives for a robust case for
the establishment of the first stage open cast which can be expanded to
meet market demand;
- Establishment of 1.5mtpa standalone mine viable;
- NPV @ 10% A$234.2 million (ZAR 1,499million) $1AUD=ZAR6.4, and IRR
(post tax) of 25%;
- 120.8 million tonnes of saleable product;
- Very low waste/coal strip ratio at Smitspan and top coal within 28
vertical meters of the surface; and
- Additional reserves underneath the Swanepoelpan and Duikerfontein
farms not yet valued.
- Drilling program (12 boreholes) on Smitspan completed;
- 5 boreholes drilled on Vetleegte and 2 boreholes drilled on Massenberg;
- The marketing activities of the Waterberg Colliery product are in
progress and ongoing;
- The Mining Rights Application was lodged and accepted by the Dept of
Mineral Resources (DMR) in early July 2010; and
- The laboratory analysis results are being received and modeled.
OPERATIONAL DEVELOPMENTS
Exploration
The drilling programme was completed on the Smitspan farm, a total of 12
boreholes were drilled, and all holes were logged and sampled and sent to
laboratories for analysis. As at 30 June 2010, results for 3 PQ (85mm
diameter) boreholes and six large (153mm diameter) boreholes were expected
from the laboratories. The results of these boreholes were key for the
following reasons:
- Completion of the BFS;
- Update of the Resource Statement; and
- Compilation of the customer bulk sample.
Drilling was also completed on Vetleegte (5 boreholes) and Massenberg
(2 boreholes). One hole had no coal intersection but on the remainder, zones
1, 2 and 3 were intersected at expected thicknesses with generally less than
30 metres of overburden cover. These coal zones have been sampled and results
are due shortly from the laboratory.
The Vetleegte area has been identified as a potential low volume producer of
high grade, low phosphorous coal suitable for use in the local metallurgical
market. The laboratory analysis results are being received and the results
are being modelled within a geological data base as the key input into the
mine planning effort. It is expected that the geological data modelling will
be completed during the third quarter of 2010.
Marketing
During the quarter ended 30 June 2010 the Company`s coal marketing and fuel
activities focused on key factors such as the reliability and consistency of
potential coal supply quantity, quality, price, coal supply contract terms,
and transportation options:
- Commercial and technical negotiations with potential off-takers
continued. It is hoped that an off-take agreement subject to conditions
precedent relating to the compliances to all Acts and mining regulations
can be finalised in due course. Management will report on progress
achieved during the Q3 of 2010.
- The intention is to secure long term agreements, with the first expected
delivery of coal toward the end of 2011.
- The Company continued to engage metallurgical industry players and they
have shown interest on our low phosphorus coal. The low phosphorus
market has a potential of both supplying coal to their furnaces and also
construction of beneficiation plants at mine-mouth to improve supply to
this under-serviced market. The Company has agreed to prepare and submit
samples of low phosphorus coal as per their request.
- Discussions are ongoing with infrastructure providers to ensure access
for initial anticipated coal production in mid to late 2011. Transnet
Freight Rail (TFR) has completed a draft pre-feasibility study of
the rail connection from Waterberg to Witbank that is likely to further
improve the supply of both power station and premium coal to the Witbank
market. The Company has a mutually beneficial relationship with TFR
where regular updates occur on the status of both the coal mine
development and the rail line upgrade programme.
- The current capacity of 91mt in Richards Bay Coal Terminus (RBCT) is not
fully utilized leaving a huge appetite for leasing by current RBCT
users.
Mining Rights Application
The application for Mining Rights for the Waterberg Colliery submitted by the
Company`s Black Economic Empowerment partner was accepted by the Department
of Minerals and Energy (DME) in July 2010. The Mine Works Program has been
recommended by the DME and work continues on the Social and Labour Plan and
completion of an Environmental Impact Assessment.
The consultation process continues to ensure that all parties are involved,
including local communities, farmers and authorities. Final approval of the
Mining Right is contingent on acceptance of a Mine Works Programme,
Environmental Impact Assessment (EIA)/Environment Management Plan (EMP),
Social and Labour Plan.
Feasibility Studies
The initial draft of the Definitive Feasibility Study (DFS) was completed
during the June quarter 2010. Management is in the process of reviewing the
draft DFS with a view to further develop cost estimates and sensitivity
analyses for the project as the basis for detailed engineering and project
financing.
CORPORATE
Cornerstone Investor
A number of potential cornerstone investors accessed the Company`s data room
and the process of identifying long term investors for the project is
ongoing. The Company will update investors at the end of the third quarter
2010.
Cash Balance
As at the end of June 2010 the Firestone Energy Group had a consolidated cash
balance of A$2.1m.
Expenditure
During the June quarter A$1.3mln was spent on exploration activities and
A$300k was expended on administration costs by the Company.
Directors
Mr. John Wallington stepped down as Managing Director on 14 June 2010, he
remains a Non-Executive Director of the Company and he is still actively
involved in driving the BFS process through to completion.
Outlook
The evaluation of the Waterberg Coal Project will continue with a view to
receiving necessary regulatory approvals. Negotiations with potential
developers, financiers and off-take parties will be progressed as the final
Feasibility Study is advanced.
For further information please contact:
Mr. John Dreyer Mr. Jerry Monzu
Chairman Company Secretary
Tel: +61 8 9381 2755
Fax: +61 8 9381 4799
www.firestoneenergy.com.au
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 whichit appears.
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: 26 July 2010
Company secretary
Pretoria
26 July 2010
Sponsor and Corporate Advisor
River Group
Date: 26/07/2010 10:20:01 Produced by the JSE SENS Department.
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