GVM Metals on Thursday finalised the deal to buy the soft coking coal opencut coal deposit, which will give it the prospecting right to 8662 hectares. The South African coal miner will acquire a 74% interest in the permits through the issue of almost 21 million shares.
GVM said the existence of coal in the area had been known since the turn of the twentieth century, although no real exploration occurred in the region until Southern Sphere Mining and Development, a division of Utah Mining, undertook a detailed exploration program in the late 1970s and early 1980s.
Most of the original borehole data from the exploration has now been lost. The project was abandoned in the 1980s with the disinvestment of Utah Mining from South Africa, the sale of Southern Sphere assets, and low coal prices.
GVM said a competent persons report had been prepared and was based largely on a feasibility study of one of the four farms in the area undertaken by Southern Sphere in 1983. The report showed an inferred resource of 352 million tonnes with a life of mine strip ratio of less than 5:1 (five bank cubic metres waste to one tonne of coal).
GVM said the coal seams extended into the adjoining farms and it believed the resource would be “substantially increased in time”
The project is 50km north of Rio Tinto’s Chapudi Coal Project and 40km west of the main Zimbabwe to South Africa railway line, which connects to Richards Bay and the Mozambique port of Maputo.
GVM said the ability to sell the middlings/steaming coal to a proximate power station would substantially improve the economics of the project.
“The Limpopo area is seen by many as the new coal province of South Africa and GVM intends to become a major participant of that development,” the company said.
GVM will now conduct a drilling program to bring the resource to measured status.
Company shares were trading up 11% at 49c midday on Thursday.
