Strategic Natural Resources PLC (“SNR”) is a Coal producer and was established on 5 October 2004 as a vehicle to develop, own and manage natural resource deposits in Southern Africa.
As its first project, SNR acquired control of Elitheni Coal (Pty) Ltd in the Eastern Cape some 200 miles north east of Port Elizabeth. The principal assets of Elitheni are a new order mining right over 92 km2 as well as new order prospecting rights over an additional 180,000 ha for coal which it holds in the Eastern Cape, South Africa.
The first mines near Molteno and Indwe were opened in 1864 and 1877. The annual coal output from these mines reached a peak between 1900 and 1904 when production averaged 176,000 tonnes per annum. With the discovery of large deposits of coal in the former Transvaal and Natal Provinces closer to where major industrial development had commenced, production declined sharply in 1917 and ceased altogether in 1948. However, the Directors believe that, with the development of CFB Combustion Technology as well as local advancements in boiler combustion and increasing electricity prices large scale mining in this area is now economically viable. A coal mine based in the Eastern Cape will fuel the growing demand for heat, power and steam in South Africa.
Elitheni coal and its licences
Elitheni has increased its prospecting rights area in the Eastern Cape province of South Africa by more than 2,000% from the initial Phase 1 and Phase 2 area of 9,283.80ha, granted in 2005, to practically 184,000ha today. The 184,000ha has been demarcated into Phases 1, 2, 3, 4 and 5. The latter having been named Project Indlovu. Full and exclusive new order mining rights have been obtained on Phase 1&2 (92 km2 area) and full and exclusive new order prospecting rights exist on the remaining Phases 3, 4 and 5 areas. New order prospecting rights give the holder the exclusive right to apply for and obtain mining rights over the area held.
The Company was admitted to AIM on 7th August 2007 on the basis of a coal resource under Elitheni’s control of approximately 15 million tonnes in the Phase 1 and Phase 2 areas. Golder Associates, SNR’s competent person has, in a recent updated competent persons report (the “Updated CPR”), confirmed an increase in Elitheni’s resources from 97.2 million tonnes to 150.3 million tonnes, comprising, 45.6 million tonnes measured resource, 45.5 million tonnes indicated resource and 59.2 million tonnes inferred resource. An additional 53 million tonnes from recent drilling activity awaits confirmation from Golder Associates as competent persons. The additional drilling undertaken in relation to the Updated CPR spans an area of circa 3,000 ha. The area drilled to date amounting to approximately 50 kms of bore holes, represents less than 5% of the total area available for drilling. Roughly 179,000 ha of Elitheni’s total rights area remains available for further assessment by Golder Associates.
Having all rights in hand to commence production, the Company commenced 2010 with plans to fast track mine development and market penetration with first supplies to local industrial clients including brick manufacturers and to begin exporting substantial quantities of coal during 2012 and beyond.
The Company has secured its first major coal offtake agreement amounting to an initiall 2 million tonnes. Further substantial coal orders are currently under negotiation with a variety of local and export customers.